Belaya Dacha Equity

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The project will provide up to US$ 20 million including US$ 10 million of debt and US$ 10 million of equity financing to Belaya Dacha Trading. This financing will support the construction of a new salad and vegetable processing facility in Tatarstan, as well as allow the company to develop its own open field lettuce production in Central and Southern Russia in order to meet its needs. It will also finance its working capital needs over 2011-2014. The financing will allow timely implementation of the investment programme and strengthen the Client’s market positions. The Project will support a local agricultural producer in promoting market expansion by strengthening backward linkages to the farmers via investments in modern harvesting technologies to increase harvest yields. It will also support introduction of healthy and value-added products to the general public outside of Moscow as well as strengthening of the Company’s capital base and developing its modernisation and expansion plan. Although the Company is the market leader its further expansion should be viewed in the context of: (i) investments in primary agriculture by applying modern cultivation methods into various Russian regions thus improving yields and quality of raw materials; (ii) reduction of imports replaced by increase in domestic production and continued support to local farmers; (iii) increased production efficiencies securing better and cheaper products to the end consumers. ZAO Belaya Dacha Trading, a closed joint-stock company organised and existing under the laws of the Russian Federation. Up to US$ 20 million facility consisting of US$ 10 million of debt and US$ 10 million of equity. US$ 32.8 million 1. Environmental classification and rationale According to EBRD's Environmental Policy and Procedures this project has been categorised B/0. EBRD due diligence was structured to understand current environment, health and safety ("EHS") impacts of the Company and issues associated with the current operations in Moscow. The analysis of the greenfield plant in St Petersburg will be conducted once the site for the new facilities has been decided and will comprise a review of the OVOS (environmental impact assessment) to be undertaken for permitting purposes. 2. Information reviewed during the environmental appraisal BDT submitted a range of information to the Bank including official reports submitted for permitting purposes, internal documents on environmental, health and safety management and an independent audit of Company’s supply chain quality management. The Bank's aim was, among other things, to assess the Company's management of EHS issues and assess compliance of current facilities with national and applicable EU standards. 3. Key environmental issues and mitigation This project may result in a number of environmental impacts including those linked to the construction process (e.g. increased noise, dust, traffic flows) and those linked to operations including access to substantial amounts of drinking quality water, disposal of contaminated waste waters and disposal of solid wastes. Construction, food processing, and primary agriculture all present occupational hazards (e.g. working with hazardous machinery and substances, manual handling issues, working at heights) which need to be recognised and managed by the Company. The operations of BDT are currently compliant with national environmental requirements. The Company is subject to regular inspections by a range of government authorities including those in charge of environment, health and safety, and hygiene. In terms of European Union standards, the Bank has made a comparison of BDT’s activities against EU's Food, Drink and Milk Industries Reference Document on Best Available Techniques (BAT). For those areas identified as key issues for food industry BDT is generally complying with the requirements of BAT. Under its agreement with the Bank BDT is committed to maintaining compliance with both national and EU requirements for environment, health and safety. Being one of the main McDonald’s suppliers of iceberg lettuce BDT’s supply chain quality management was audited by independent consultant with positive compliance results. As a part of the ESAP the Company will implement ISO 14001, OHSAS 18001 management systems at corporate level. The Environmental Management System will develop key performance indicators based on EU IPPC BAT requirements as provided in Food, Drink and Milk processes as well as the IFC EHS Guidelines Plantation crop production of 30.04.2007. 4. Environmental opportunities BDT are aware of the benefits of improving eco-efficiency and is already committed to implementing actions which minimize energy use and water consumption. Such actions include the implementation of more energy efficient techniques for the production of PET bottles and an increase in the recycling of production waters. 5. Summary of Environmental Action Plan An environmental and social action plan ("ESAP") has been drafted and includes actions for industrial and solid waste minimisation, storm water treatment, food safety measures improvement, and better labour relations management (workers representatives and collective bargaining) and stakeholder engagement. The ESAP also includes actions to implement an Environmental Management System compliant with ISO14001 and an occupational health and safety management system compliant with OHSAS18001. 6. Disclosure of Information and Consultation The Company will carry out its activities in accordance with national requirements for public disclosure and consultation. Additionally, the Company is disclosing this summary of key environmental issues locally, in accordance with EBRD requirements, prior to the EBRD's final management review of the project. 7. Monitoring and Reporting The Company will provide the Bank with an annual environmental report and immediate notification of any material incidents or accidents likely to have an effect on the environment or worker and public safety. None. Vadim Ekomasov, CEO Tel.: +7 495 921 1747 e-mail: vekomasov@belaya-dacha.ru Irina Shatskaya, CFO Tel.: +7 495 921 1747 e-mail: ishatskaya@belaya-dacha.ru