Sodrugestvo

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25021
Company name	United Trading A/S
Country	Russian Federation
Sector	Agriculture and Forestry
Environmental category	B
Department	Agribusiness
Status	Active

Date SPI disclosed	September 28, 2007
Projected board date	October 29, 2007
Previous Events	Invested: February 22, 2008 Signed: January 31, 2008 Approved: December 13, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

United Trading A/S (or the company) is a holding of the Sodrugestvo group of companies, the largest importer and distributor of animal nutrition products in Russia. The company is developing local soy bean crushing capacity to capture additional processing margins, to optimize the efficiency of trade logistics, and to improve service to its existing clients, the Russian livestock producers. The project is to complete the construction of:

- the company’s own specialized agricultural commodities port in the Kaliningrad Region, Russia;
- two soybean/rapeseed crushing plants,
- an edible soybean oil refinery; and
- provide permanent working capital.

Anticipated development impact of the project

The company’s port presents a significant upgrade over existing facilities in Kaliningrad, utilizing modern equipment to efficiently load and unload freight vessels. By processing soybeans in its port, the company will be able to increase the efficiencies of logistics and improve service to its clients by reducing delivery times and improving product quality. In addition to improving its own operational efficiencies, the company plans to offer port services to third parties in Kaliningrad, thus provide benefits to other agricultural commodity traders.

Currently the company employs about 550 staff. It is expected that the project will generate a minimum of 100 additional positions, mostly unskilled. The company offers training especially for key operations management positions which do not have an equivalent in the local market.

The company is expected to be the largest local rapeseed buyer purchasing raw materials directly from local farmers once the rapeseed crushing facility is completed.

The company has begun to improve its corporate management, governance, and business transparency, including the adoption of IFRS reporting standards. The company understands the need to improve corporate governance further and is expected to attract independent international industry expertise to the Board.

IFC's expected development contribution

IFC’s key contributions to the company’s development are expected to be as follows:

- advising the company on strategic and industry issues,
- improving corporate governance of the family-owned business through the proposed participation at the Board of Directors,
- providing and mobilizing long-term debt financing with terms appropriate to a capital-intensive project,
- providing industry and sector expertise.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Environmental and Social Review Procedures. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization will shortly be publicly available in the Environmental and Social Review Summary (ESRS) disclosed on IFC’s website (http://www.ifc.org/projects). The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that the client will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards.

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