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Summaries of proposed guarantees are provided prior to Board consideration and final contract signing, and therefore are subject to change. Project briefs are disclosed after contract signing and do not reflect subsequent modifications (e.g., changes in guarantee amount).
Project Name OOO SUNTY
Guarantee Holder Tetley Overseas Holdings Limited (unit of Tata Tea, India)
Investor Country United Kingdom
Host Country Russian Federation
Sector Manufacturing
Gross Exposure ($million) 30.40
Fiscal Year 2009
Status Proposed
Project Number 7469
Environmental Category B
Date SPG Disclosed April 13, 2009
Project Board Date May 14, 2009

This summary covers a proposed investment by Tetley Overseas Holdings Limited (TOHL) of the United Kingdom, to acquire partial ownership of Russian packaged coffee and tea product manufacturer, OOO Sunty. TOHL has applied for a MIGA guarantee of $30.4 million for a period of up to 20 years, against the risks of transfer restriction, expropriation, and war and civil disturbance. MIGA’s guarantee would cover TOHL’s investments of equity, future retained earnings, and dividend entitlement in OOO Sunty.

TOHL will be effecting its investment in OOO Sunty in conjunction with the European Bank for Reconstruction and Development (EBRD), and the two will invest an estimated $26.3 million in a combined 51 percent ownership in OOO Sunty, with the deal involving a working capital investment for OOO Sunty, transfer of trademark ownership in CIS and Europe, long-term lease agreements for production facilities and warehouses, additional improvement measures for the infrastructure and environmental protection.  A $3.0 million portion will be applied to the purchase of additional equipment and computer system enhancements to OOO SUNTY’s operations.

Currently OOO Sunty – via its predecessor entity, “Grand Group Russia” – has estimated market shares of 6 percent and 5 percent, respectively, of the total Russian market for packaged coffee and tea products, by volume

Environmental Categorization

The project is a Category B under MIGA’s environmental review procedures. Click here to view the Environmental and Social Review Summary.

Development Impact

Expected developmental impacts of the project include: increased competition in the Russian packaged coffee and tea product business segment, via introduction of global Tata Group brands such as “Tetley Tea” and “Eight O’clock Coffee;” improved production processes and product quality by applying Tata Group’s expertise in the areas of production efficiency and tea buying and tasting; and, introduction of global Tata Group human resource best practices to OOO Sunty’s operations.

MIGA’s proposed guarantee for this investment is consistent with the first pillar of the World Bank Group’s Country Partnership Strategy for Russia which focuses on sustaining rapid economic growth.

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