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August 18, 2022

BCR financed a EUR 12.7 Million green financing package for a biodegradable foil production capacity of TeraPlast Group

TeraPlast Group, one of the largest Romanian building materials manufacturers, has signed an agreement with Banca Comercială Română, for a EUR 12,7 million green financing package. The funds will be used for a fully-fledged greenfield investment in biodegradable foils.

The financing will be used for the construction and equipment of a production unit for the manufacture of biodegradable packaging, bags and sacks, in accordance with Law 181/2020, on the management of compostable non-hazardous waste, which defines the compliance criteria for biodegradable waste (90% biodegradable materials and OK compost certification). The TeraPlast Group project benefits from a mixt financing, which includes the shareholders contribution, a bank loan in accordance with green financing principles and a state aid, covering 50% of the eligible costs.

The green financing package of EUR 12.7 million will be divided in two tranches: EUR 6.9 million for up to 7 years maturity and EUR 5.8 million bridge financing for the state grant to be received. For this investment, TeraPlast Gorup will create a new company, TeraBio Pack SRL, and the plant will be operational in the third quarter of this year. The addressed markets for this project are Romania and nearby countries. The main raw materials for this unit are polylactic acid and potato starch, falling under renewable feedstock – based activity, in line with EU taxonomy.

TeraPlast is the market leader in PVC exterior pipes and PVC granules. The Group is investing in 2021 to double its recycling capacity to become one of the top five European recyclers of rigid PVC. Investments will also continue in expanding their renewable energy production, as currently 11% of the production needs are covered through photovoltaic panels. The company aims to reduce greenhouse gas emissions by 100%, to increase the share of energy from renewable sources up to 20-30%, and to continue digitizing the internal processes. In 2021, TeraPlast has made a commitment for responsible corporate governance, becoming a part of UN Global Compact, adhering to principles in the areas of human rights, labour, environment and anti-corruption.

“This project of over €12 million for the biodegradable foil production facility is the Group’s largest investment to this date in sustainable products. We are pleased to work with BCR and appreciate their support in this investment. We have converging interests regarding the business sustainable approach. Our entire business model is defined by responsible governance: corporate, social and environmental, and by developing this new facility we are not only responding to a need, but we are also bringing a major contribution to achieve the targets of replacing plastic packaging with biodegradable products. The new investment will represent a new basis for the sustainable development of the Group”, said Ioana Birta, CFO TeraPlast.

“We are an active supporter of the business environment, especially when it comes to sustainable investments, where we see a business model based on respect for the environment and responsibility for the future. We already financed green investments in Romania, especially in the field of renewable energy, and TeraPlast Group is a leading example when it comes to green investments. We hope that their model will be followed as often as possible in the Romanian business market. The Erste Group is aligned with the UN Global set of commitments in the areas of environment, social engagement and corporate governance, and through our green, sustainable financing activities, we are directing our efforts towards mitigating the negative impact of ESG risk factors. Also, we actively assume the role of advisors for our clients, supporting them through different phases of analysing, structuring and implementing specific ESG objectives”, said Ioana Voinescu, Head of Construction & Transportation BCR.

The development of this production facility for biodegradable packaging means responsible and sustainable operations, and Law 181/2020 on the management of compostable non-hazardous waste, which entered into force on 20th of February 2021, requires biodegradable bags use in households.



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