1. Financing Agribusiness in Serbia and Montenegro Levent Aydinoglu, Associate Banker Belgrade, 27 May 2004

2. Structure of the presentation EBRD and agribusiness EBRD experience in agribusiness financing in CEE and CIS Selected agribusiness transactions Opportunities for financing agribusiness in Serbia and Montenegro Contact Information

3. What is the EBRD? International financial institution, promotes transition to market economies in 27 countries from central Europe to central Asia Owned by 60 countries and two inter-governmental institutions Capital base of €20 billion Cumulative commitments €22 billion Unaudited September 2003

4. Catalyst for change EBRD investments have attracted an additional € 47 billion from domestic and foreign investors The EBRD uses donor funding to assist project preparation and catalyse foreign investment Cumulative funds mobilised € 47.1 billion

5. Financial flexibility - Loans Financing structured to meet project-specific needs including repayment schedules Tailored to particular situation of the country/region and sector Pricing reflects risks with project, borrower and country Wide range of loans fixed or floating rate loans choice of currencies short to long-term maturities

6. AAA-rated multilateral institution founded in 1991, owned by 60 national and two supranational shareholders Playing a leading role in Central & Eastern Europe (CEE) and the former Soviet Union (CIS) Business oriented - working closely with private sector clients on commercial transactions EBRD and Agribusiness

7. EUR 3.25 bn invested in 205 projects. EUR 56.1m invested in 6 projects in Serbia and Montenegro. Serbia is the 12th largest recipient of the EBRD financing in the agribusiness sector following Russia, Ukraine and Poland. EBRD and Agribusiness EBRD annual investments in Agribusiness (million €)

8. Food Processors Agricultural Inputs Production Primary Processing Foodservice Distribution Packaging Production Consumer seeds fertiliser farm machinery agricultural chemicals bio-tech distributors grains oilseeds livestock poultry dairy fish horticulture produce crushers (sunflower, soya bean) millers grain handling produce market meat bakery snacks beverages frozen foods fish pet food glass bottles & jars PET bottles cans carton containers restaurants supermarkets institutions distributors EBRD and agribusiness: Financing of entire food chain

9. EBRD and agribusiness: Financing local & foreign market leaders

10. Recent Agribusiness Projects in Serbia and Montenegro Name of ProjectEBRD Finance (Euro) Debt/Equity Serbia/EPH/Warehouse Receipt Programme 6mDebt Fresh & Co10mEquity Frikom10.1mDebt Grand7mDebt Marbo7mDebt SFIR16mDebt

11. Grand Coffee Local entrepreneur with successful track record Serbia and Montenegro's largest coffee company €7 million debt to finance domestic and regional expansion Selected Investments in 2003

12. Bonduelle Selected Investments in 2003 Bonduelle, world’s top processed-vegetable producer €15m equity investment For the construction of a greenfield vegetable canning plant, located in the Kransnodar region, Russia To produce 60,000 tonnes of fresh packaged vegetables

13. Financing to DOEP (Cereol’s subsidiary) leading producer of refined edible oil in Ukraine A syndicated loan of US$ 43m, structured and arranged by EBRD, to co-finance purchases of sunflower seeds and related working capital requirements. Selected agribusiness transactions

14. (1) Working capital: lack of security and of financial support to farming and primary processing sector (2) Government policies: changing laws/regulations, complex restructuring of agri- conglomerates, EU accession talks cause further uncertainties (3) Production efficiency/competitiveness: structural reasons for lower yields (4) Global industry challenges apply as well… bargaining power of food producers vs retail chains EBRD experience in agribusiness financing: Key issues faced

15. Strong processors are the key to a healthy sector Strong processors are the key to a healthy sector –provide a sustainable market for agricultural products It is better to focus on the best companies It is better to focus on the best companies –with long term views, and competitive advantages (marketing, distribution) There are no standard financial solutions There are no standard financial solutions –agribusiness companies often need tailor made solutions We have to understand the whole food chain We have to understand the whole food chain –to make sure sufficient quality supplies are available A better legal and institutional framework is a must A better legal and institutional framework is a must –For farmers and processors to get the financing they need EBRD experience in agribusiness financing: Key issues learnt

16. Opportunities for financing agribusiness in Serbia and Montenegro: Traditional finance Debt Senior, subordinated, convertible Working capital Long-term maturities Denominated in major currencies Flexible tailor-made security package Political risk guarantees Equity Common stock Preferred shares Mezzanine financing Large minority positions Political risk guarantees (portage equity) Co-financing / Syndications Substantial in- house syndication department Equity / debt underwriting

17. Large number of high quality food producers with well known branded product Increasing penetration of organised retail and the opportunities and challenges this creates Restructuring of food industry is not complete yet. Financing needs are enormous. Opportunities for financing agribusiness in Serbia and Montenegro

18. Opportunities for financing agribusiness in Serbia and Montenegro: Structured finance Example: Warehouse Receipt Programme WR 1 2 3 € € Sale 45 6 WR € Risk participation with local bank OR credit line to the local bank

19. Example: Suppliers financing 1 € Off- take + Know how Guarantee € Loan 2 3 4 € Funded or un-funded participation Opportunities for financing agribusiness in Serbia and Montenegro: Structured finance

20. Levent Aydinoglu Tel: +44 207 338 7021 Email: Aydinogl@ebrd.com Associate Banker, Agribusiness Team Contacts