APU II

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The EBRD is considering providing of up to USD 56 million syndicated loan to APU Joint Stock Company, a company organized and operating in Mongolia. The proceeds of the loan will be applied to finance: (i) a new brewery (ii) construction of a modern logistics centre (iii) new dairy factory, (iv) new PET filling line (v) working capital needs of the company and (vi) partly restructure the existing debt portfolio. The dairy sector in Mongolia is still in a nascent stage and the Project will lead to the development of a milk production supply chain with local herders, promoting higher product quality standards. The transaction will also have a demonstration effect arising from construction of fresh milk based dairy production facilities in Mongolia as well as a modern logistic centre. This will result in an improvement in both overall industry standards and company’s operations. APU Joint Stock Company is the largest beverage company in Mongolia. APU, established in 1924, was one of the first companies privatised in 1990s and is listed on the Mongolian Stock Exchange. Up to USD 57 million senior secured loan. Approximately USD 108 million. The Project has been categorised B in accordance with the EBRD Environmental and Social Policy. Environmental and social due diligence (ESDD) has been undertaken by the Bank’s Environment and Sustainability Department based on a review of the Company’s corporate management systems; relevant information provided by the Company; and a site visit and discussions with the Company’s personnel to evaluate the current operational performance and the risk management plans for the planned investment programme. The Company has an advanced supply chain management system which adheres to international standards; it undertakes regular audits of its suppliers which drives improvements in risk management standards throughout the supply chain in Mongolia. The Company itself is subject to audits by its own customers (Coca Cola for example) to evaluate that the Company operations remain at the exacting standards required by these customers. The ESDD identified that the current performance in regard to environmental and health and safety risk management are operating at a high level, in line with the Bank’s requirements, and that the Company plans to apply these standards to the planned investment programme. The investment programme itself includes certain aspects with direct environmental benefits, such as the energy recovery plans for the brew-house operations. An Environmental and Social Action Plan (ESAP) is being developed which will allow the Company to achieve compliance with national regulations and the Bank’s PRs. Specifically, the ESAP requires the Company to implement measures regarding contractor performance at the construction sites and develop a Stakeholder Engagement Plan for the Project. The Bank will monitor the Company’s environmental and social performance and implementation of the ESAP through annual E&S reports. None. Ms. Ariunsan Chadraabal Head of International Affairs Department Email: ariunsan@apu.mn Tel: (976-11) 344554 Fax: (976-11) 343063