FMO supports Laos forestry company's expansion plans
Dutch development bank FMO has announced a $12 million senior debt facility, together with Building Prospects Fund, to Mekong Timber Plantations (MTP), the largest forestry plantation company in Laos.
The loan will help finance MTP’s expansion of plantation area, together with the construction of an integrated mill. It also supports enhanced climate mitigation via sustainable plantation expansion and the creation of durable wood products, which provide long-term carbon storage.
The financing comes in the form of an eight-year senior debt facility, with $7 million provided by FMO and $5 million provided by Building Prospects, a fund which FMO manages on behalf of the Dutch government. The two loans complement equity financing committed in 2017 by the Tropical Asia Forest Fund, a private equity fund specialising in sustainable forestry and managed by global timber investment firm New Forests.
The proposed mill will greatly expand MTP’s timber utilisation, diversify their forestry strategy, and provide significant opportunities for local employment, while capturing higher value for local production in the more rural parts of Laos. The financing will also be used by MTP to expand their current plantation area over the next five years.
