Kernel Group

cancelled

The EBRD is considering providing a senior secured loan of up to USD 60 million to Kernel Holding SA (“Kernel”). The loan will comprise a syndicated portion of up to USD 30 million. The loan will mainly serve to refinance a one year bridge loan raised for the acquisition of the strategic grain port terminal in the Black Sea port of Illychevsk near Odessa, Ukraine The transition impact is expected to stem from creation of the largest integrated grain supply chain in Ukraine, from farm gate to ship to final delivery in consumer countries with its positive effects on local farmers, and from future efficiency improvements and increases in capacity utilisation from an annual throughput of 3 million tonnes of grain to potentially 4.5 million tonnes. Kernel Holding, which is incorporated in Luxembourg and listed on the Warsaw Stock Exchange, is Ukraine’s largest vertically integrated agro-industrial holding, one of the country’s top-5 grain exporters and the leader in the domestic market for bottled sunflower oil. Business activities include origination, farming, storage and sunflower/oilseed crushing, and most recently also transhipment facilities on the Black Sea. Up to USD 60 million senior secured loan to Kernel Holding, with up to USD 30 million to be syndicated. The deep sea port terminal was acquired in June 2008 by Kernel for a total consideration of USD 93 million. Screened B in accordance with EBRD's 2008 Environmental and Social Policy. The environmental and social due diligence is currently on-going and will include an environmental, health and safety and social corporate audit/review of Kernel's port terminal capacity to manage and address E&S issues associated with the project, assess their compliance record and identify main stakeholder groups, review Kernel's current environmental and social management systems and carry out an audit (Phase I) of the existing facilities and operations of the Port Terminal to ensure compliance with the EBRD's Performance Requirements (PRs). An analysis of any potential environmental and social impacts and benefits of the envisaged modernisation / investment programme will be carried out, and an Environmental and Social Action Plan (ESAP) will be prepared and agreed with Kernel to address any environmental and social issues identified during the due diligence to bring Kernel's Port Terminal operations into compliance with the Bank's PRs within a reasonable time-frame. Kernel will develop a Stakeholder Engagement Plan, including a grievance mechanism, and will release information on environmental and social performance and a summary of the agreed Action Plan to stakeholders. This PSD will be updated when the results of due diligence are known. None. Patrick Conrad c/o Kernel Trade, 35 Olesya Gonchara St, 01034 Kiev, Ukraine Tel: +38 (044) 461 88 01 Email: p.conrad@kernel.ua