Kazexportastyk - Equity

disbursing

Translated version of this PSD: Russian The EBRD is considering making an equity investment of up to US$ 45 million in JSC Holding Kazexportastyk (“KEA” or the “Company”) through a share capital increase. The purpose of the proposed Bank’s investment is to provide long-term capital to improve the Company’s balance sheet structure by refinancing financial debt related to recent acquisitions and prepare the Company for further growth. When approved by the EBRD’s Board of Directors, specific transition impact objectives will be drawn from the following areas: Setting standards for corporate governance and business conduct. The expansion of the Company and further strengthening of the existing corporate governance via the Bank’s active involvement as a shareholder should benefit the Company as well as provide highly visible demonstration to the private sector of strong corporate governance. Demonstration effect of diversified business model. KEA is one of the largest agricultural producers in Kazakhstan and a local pioneer in crop rotation. Bank financing will contribute towards allocating long-term funding for the Company’s business model of continued diversification into oil bearing crops from wheat, which remains the main crop produced in Kazakhstan. Successful implementation of this business plan will have a significant demonstration effect to other agricultural producers. Demonstration effect of the Bank’s equity investment. Equity financing by private investors or IFIs in primary agriculture is extremely rare in Kazakhstan (for instance, it is the first equity financing by the Bank of a private company whose core business is primary agriculture in the entire region). An investment by the EBRD will have a substantial demonstration effect to potential future investors in the agriculture sector in Kazakhstan and in the overall EBRD region. KEA is the largest oilseeds producer and the third largest grain producer in Kazakhstan. The Company is a fully integrated farming enterprise with grain terminals (including a port terminal in Ukraine), flour mills and long-term usage rights to 410k ha of fertile agricultural land. In addition to own farms it indirectly farms an additional area of ca. 615k ha through pre-financing arrangements with 20 farms. The EBRD is considering making an equity investment of up to US$ 45 million. Up to US$ 45 million. Categorised B (2008). An independent third party environmental and social corporate audit was undertaken in September 2009. Due diligence for this equity transaction included a review of the Company's annual reporting and progress with the ESAP. The Company report they are materially compliant with E&S regulations and are making progress with the ESAP. A revised ESAP has been developed for this equity deal to further strengthen E&S capacity within the Company. Under this new project the Company will be required to continue to comply with the Bank’s Environmental and Social Policy 2008 Performance Requirements applicable to the project (specifically PRs 1-8 and 10). The Bank will monitor the Companies’ environmental and social performance for the lifetime of the loan through annual environmental and social reporting. The Companies will be required to immediately notify the Bank of any incidents or accidents likely to have an effect on the environment or worker and public safety. None. Mehmet Ilkin ilkinm@ebrd.com