Surpapel Group Project
Project Description
On November 4, 2020, the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, issued guarantees totaling US$57 million to cover refinancing of existing short-term loans to optimize the capital structure for Surpapelcorp S.A. (Surpapel), an existing paper mill, and Productora Cartonera S.A. (Procarsa), an existing corrugated cardboard box plant, located in Duran industrial complex in Ecuador (the Project). The MIGA guarantees cover non-shareholder loan investments that were made by Cordiant Capital Inc., on behalf of Cordiant Capital Funds and Cordiant Global Credit Opportunities S.C.S.; Belgian Investment Company for Developing Countries SA/NV and Finnish Fund For Industrial Cooperation Ltd, against the risks of Expropriation for up to 8 years.
Environmental Categorization
The Project is a category B under the MIGA’s Policy on Environmental and Social Sustainability.
Development Impact
The Project supports the financial sustainability of Surpapel and Procarsa. Through the provision of long-term financing, the Project reduces Surpapel and Procarsa’s liquidity concerns and enables the implementation of its expansion plans in a financially sustainable manner. In doing so, the Project is supporting a company that is (i) lowering the prices to consumers, (ii) improving the quality of its products, and (iii) diversifying its revenue sources by expanding into the domestic market away from only catering to fruit exporters, in turn creating an import substitution market opportunity.
The Project is consistent with the World Bank Group (WBG) Country Partnership Framework (CPF) FY2019-2023 for Ecuador, which is organized around three focus areas: (i) supporting fundamentals for inclusive growth, (ii) boosting human capital and protecting the vulnerable, and (iii) enhancing institutional and environmental sustainability. Through its focus on supporting the financial sustainability of Surpapel Group, the Project addresses one of the main bottlenecks of doing business in Ecuador – access to credit.