Asnova II

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	26140
Company name	CJSC Logistic Centre Kalyinivka
Country	Ukraine
Sector	Wholesale and Retail Trade
Environmental category	B
Department	Global Manufacturing & Services
Status	Pending Disbursement

Date SPI disclosed	January 23, 2008
Projected board date	February 25, 2008
Previous Events	Signed: May 12, 2008 Approved: May 8, 2008

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

LLC Savservice Center (Savservice) is a Ukrainian company involved in the distribution, warehousing and logistics of fast-moving consumer goods. Raven Russia Limited (Raven) and Savservice (together know as the Sponsors) are forming a 50/50 joint venture holding company, Logistics Center Kalynivka (LCK) to:

- construct new warehouses of up to 85,000 m²; and
- refurbish existing buildings with an area of 15,000 m²

The project will be built on LCK’s existing Kalynivka site adjacent to the buildings renovated under IFC’s first project with Asnova, and the finished space is expected to be leased by Komora, a local logistics and warehousing company and a subsidiary of Savservice.

Anticipated development impact of the project

The project would contribute to the increase in availability of modern distribution, warehousing and logistics services in Ukraine. Access to quality services will help lower overhead costs for both suppliers and retailers of fast-moving consumer goods. This benefit is especially valuable for the fast-moving consumer goods suppliers and retailers in Western Ukraine, which has been the company’s focus area. In addition, the development impact of the project is expected to include the following benefits:

- the project would help address the issue of shortage quality warehousing space in Kyiv;
- the project will directly create more than 1000 new jobs;

IFC's expected development contribution

By providing long-term debt financing otherwise not available for the [company][define], IFC would enable the sponsors to proceed with their strategically important expansion while remaining financially sound.

This is the first project the shareholders are investing in together and IFC, building on its existing relationship with Asnova, provides comfort to both Shareholders as an attractive and acceptable partner.

IFC will help the company in mobilizing capital from international lenders through a proposed B Loan, improving the company’s access to finance in the future and demonstrating to foreign investors the potential for non-export related investment in Ukraine. This is especially important given that the Ukrainian business environment is still viewed as highly risky by international investors

Environmental and social issues - Category B

The review of this project consisted of appraising technical, environmental and social information submitted by the company and visiting the “Kalynivka” site. The following potential environment, health and safety and social impacts of the projects were analyzed.

- Environmental management procedures.
- Land acquisition and planning procedures;
- Emissions to air and water;
- Solid and hazardous materials management;
- Occupational health and safety, including fire protection and emergency response;

The company has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the Environmental Review Summary (ERS).

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