October 27, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Three key international organizations: IFC, a member of the World Bank Group; the European Bank for Reconstruction and Development (EBRD); and the U.S. International Development Finance Corporation (DFC) are joining forces to provide a $480 million finance package to leading Ukrainian agribusiness group MHP.

This funding will not only help the company maintain its operations, boost its sustainable power generation capacity, and reduce its carbon footprint, but will strengthen Ukraine’s agribusiness sector and boost global food security. 

Since February 2022, Ukraine’s ag sector has seen damages totaling as much as $8.8 billion, according to the Kyiv School of Economics, that include the destruction and damage to agricultural machinery, granaries, and manufacturing facilities. At the same time, the country’s agribusinesses are facing increased production costs, energy shortages, a decline in crop and livestock output, and logistical challenges making this financing all the more critical. 

Within this operating environment, Ukraine’s MHP is a leading international food and agritech group and the country’s largest producer of poultry and processed meat products, employing more than 28,000 people. In addition, MHP supports thousands of small businesses, including more than 2,000 small retail stores and 2,500 of the country’s farmers, as it works to reestablish supply and export routes to continue shipments to more than 70 countries. 

Breaking down the package, the IFC is extending a $30 million loan to upgrade and expand the company’s agricultural waste-to-energy facility to significantly increase its green power generation capacity and reduce its carbon footprint. It also is extending an additional $100 million in financing to help MHP increase its stability by re-financing its Notes due in May 2024.

IFC’s financing, which is part of its $2 billion Economic Resilience Action program launched last year to support economic activity and job creation through the war, is backed by a first-loss guarantee from the United Kingdom through its Foreign, Commonwealth & Development Office, the IFC Canada Facility for Resilient Food Systems, and other sources of blended concessional finance.

The EBRD is lending $100 million for MHP to sustain its financial equilibrium through the refinancing of its Eurobonds at a time where access to capital markets is limited. This loan will be guaranteed by Spain and credit support from the  EBRD Crisis Response Special Fund (France, Canada, Italy, Japan, Norway, Switzerland, the United Kingdom, Germany, Netherlands, Denmark, and the U.S.).

In response, MHP has committed to strengthening its climate corporate governance via a technical assistance assignment funded by the Clear Technology Fund, under the High Impact Program. 

“Boosting production and securing the agricultural value chain is critical to ensuring food security, one of the EBRD’s five investment priorities for Ukraine,” said Matteo Patrone, managing director for Eastern Europe and the Caucasus, EBRD. “As the country’s biggest institutional investor, the Bank aims through lending to agribusiness clients to preserve jobs and keep the sector working effectively. This loan is very much in that spirit.”

DFC is committing to a $250 million loan to MHP to support the Ukrainian poultry and grain producer’s efforts to mitigate the overall effects of the invasion. These funds will be used to refinance mature debt and support the company’s poultry and grain production efforts. It will also support the company’s ability to increase food production, storage, and export capacity, while easing food insecurity exacerbated by the war. 

“A thriving Ukrainian agricultural sector is not only critical for sustaining the country but is equally important to global agricultural supply chains that have been disrupted by Russia’s invasion of Ukraine,” said Agnes Dasewicz, chief offering officer, DFC. “DFC is proud to provide crucial financing to support Ukraine’s ability to supply global markets with essential staples that ensure the health and stability of many nations.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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