Rabobank and Mercon Coffee Group closed a $500 million sustainability-linked senior secured revolving credit facility led by Rabobank.
The transaction refinances an existing facility with pricing linked to key sustainability initiatives measured by performance indicators that are aligned with Mercon’s long-term strategy and purpose of building a better coffee world. The new facility consists of a $250 million Origin Tranche to finance assets in Mercon’s coffee growing origin countries including Nicaragua, Brazil, Guatemala, and Honduras and a $250 million Destination Tranche to finance assets in countries coffee is destined to, such as the U.S. and European countries.
“As the world-leading food and agricultural financier, sustainability and innovation are key strategic drivers”, said Karel Valken, Rabobank’s Global Head of Trade and Commodity Finance Agri. “Financing coffee and improving the livelihood of smallholder farmers are at the heart of our business and we are very proud to have a shared commitment with Mercon to drive change. This facility is underscoring our mutual ambitions and is unique in its structure”.
“Mercon strives to create long-term benefits that reach far beyond the supply chain. The result of our efforts leads to an inclusive sector that supports sustained supply of coffee and the conservation of nature and its natural resources for generations to come. We are proud of the partnerships we have built that allow us to implement innovative solutions for the prosperity of all,” said Juan Pablo Ibarra, Chief Operating Officer of Mercon.
Pricing on the facility could be discounted or have a premium applied based on compliance with the sustainability performance indicators. Any discount will be disbursed to Mercon’s holistic and unique sustainability program LIFT or Seeds for Progress Foundation contributing to the overall wellbeing of coffee growing communities. Any premium will be disbursed to similar programs sponsored by Rabobank as the sustainability structuring agent along with ING Capital LLC, and International Finance Corporation and the Inter-American Investment Corporation as sustainability coordinators.
LIFT, which started in Nicaragua has now expanded to Guatemala, Honduras, Brazil and Vietnam, and it is Mercon’s flagship sustainability program. It fundamentally strives to raise the living standards of coffee communities by improving production and quality levels through the adoption of the latest technological developments and environmentally friendly and socially responsible agricultural practices.
Netherlands-based Mercon is a vertically integrated global green coffee supplier and has companies in nine countries. The new two-year credit facility, which replaces the company’s existing facility, is led by Rabobank.
“This facility is a culmination of discussions we’ve had for more than a year on the appropriate structure and bank group for Mercon. Having commercial banks that understand the coffee industry and multilateral development banks that have a strong presence in Latin America provide a unique financing solution for Mercon” said Nader Pasdar, Rabobank’s Head of Markets North America. “We are pleased to have the banking partners in this facility that recognize and share our commitment to sustainability and excellence.”