LR Group will invest over 200 million shekels in agricultural projects in Papua New Guinea.
In August the company signed an agreement to invest 154 million NIS in the development of the dairy sector in PNG, located in the south western part of the Pacific Ocean, north of Australia, and an additional 54 million NIS will be used to establish a frozen vegetables factory. For both projects LR Group received foreign trade risk insurance credit from ASHR’A, the Israel Foreign Trade Risk Insurance Company.
As a part of the transaction for the establishment of the frozen vegetables factory, LR signed an agreement with Highlands AIC, controlled by the Government of Papua New Guinea and Innovative Agro Industries. The plant will be constructed within two years in the mountainous Southern Province, and will help to reduce the dependence of Papua New Guinea on frozen vegetable imports.
Israel Discount Bank will provide trade financing through credit buyers, which will be provided as a loan to Highlands AIC totaling $12 million and guaranteed by the Government of Papua New Guinea. Funding will be provided in stages and according to completion of project milestones. The company will repay the loan over 10 years with the risk of repayment of the loan being insured by ASHR’A.
This is the second export credit deal insured by ASHR’A in five months in Papua New Guinea. The previous export transaction in August last year was also an LR Group export deal to the value of $41 million (approximately 158 million NIS) and funded by Bank Leumi through credit buyers. In the framework of the deal, LR Group signed an agreement with Dairy Central to establish a development center for dairy products in the Central District, adjacent to Port Moresby, the capital of Papua New Guinea – and is expected to include a dairy, crops and a dairy processing plant, which will help increase the production of local milk and reduce dependence on imports of dairy products to the state.
The volume of Israeli exports to Papua New Guinea over the past year amounted to $ 3.1 million. Papua New Guinea is rated by ASHR’A as credit risk rating 6 out of 7, which is considered high risk.
According to Tzahi Malah, CEO of ASHR’A, “This is the first year that ASHR’A has insured deals in Papua New Guinea deals and this is the second such transaction in only five months to the amount of approximately $ 55 million. Israel is blessed with advanced technologies and solutions in the fields of agriculture which present significant export potential in countries such as Papua New Guinea, characterized by geographic isolation and heavy dependence on imports.
Ami Lustig, CEO of LR Group, said: “The group specializes in the export of Israeli agricultural technology and know-how, adapted to the host country, and thus creating a significant change in the regional economic development of the host country. The dairy and frozen vegetable plant in Papua New Guinea will be cornerstones in the country’s food sector and will promote sustainability and reduce the countries dependence on imports.
Corinne Ganor, Head of Structured Export Finance at Israel Discount Bank
commented “in recent years the Bank has developed skills and products to provide solutions for a wide range of exports including export to developing countries, in cooperation with the credit.
LR Group, owned by Roy Ben Yami and Ami Lustig, was founded in 1985 and specializes in, among other things, the design, development and construction of projects in the areas of energy, water, agriculture, communications, infrastructure and health. The Group operates in developing countries, establishing agricultural development of large-scale projects, in cooperation with local populations and utilizing their talents, their lands and their resources optimally.
ASHR’A promotes Israeli exports through the provision of credit insurance for export transactions and investments in medium and long-term Israeli exporters. The company offers Israeli exporters diversified insurance solutions that allow minimizing risks and obtaining financing transactions medium- and long-term (1-15 years). The company provides coverage against two types of risk: political risk associated with the rule of the destination country – war, nationalization, etc. – and the commercial risks associated with the entire company carried out the transaction, such as bankruptcy.
Published by The Marker – online – www.themarker.com – on January 26, 2017