Laona

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Translated version of this PSD: Ukrainian The proposed project is designed to support Laona Group in financing additional stock of pharmaceutical products, improving operations, ensuring faster processing of payments, restructuring its balance sheet and improving its equity position. The transition impact and demonstration effects associated with this potential investment are expected to include: Laona Group is a Ukrainian pharmaceutical wholesale and retail group. Alba Ukraine is a wholesale pharmaceutical distribution company and the key asset of the Laona Group The Bank will provide a financing package to Laona Group consisting of equity investment up to USD 12 million and a loan of USD 13 million. USD 35 million Environmental classification and rationale The project is Categorised B. Operation of the pharmaceutical wholesale and retail network and future construction of a warehouse facility are associated with a number of site specific issues, which can be readily identified, assessed and mitigated through measures as defined in the Environmental and Social Action Plan. Due diligence completed An Independent Consultant was retained to audit the Company’s internal risk management resources and assess their capabilities to operate to the standards required by the Bank’s Performance Requirements (PRs). Additionally, site visits were undertaken to operational facilities in Borispyl and Odessa. A detailed analysis of the use of proceeds of the loan and equity financing was undertaken. Key environmental issues and mitigation The Company’s operations carry a low degree of environmental and social risk. Due diligence identified a need to document management systems procedures at the Corporate level and additionally identified a number of waste management, contractor management and emergency response issues which require to be addressed in order that the Company can operate to the standards of the Performance Requirements (PRs). These issues require mitigation actions to address not only operational risk but also the risks posed by the construction and fitting-out activities which are part of the Project going forward. Summary of Environmental Action Plan The Company will be required to adhere to the relevant host country and EU environmental, health and safety regulations and standards; and to operate to the standard required by the Bank’s PRs. To ensure this occurs, the Company is required to develop a capability around EHS management and implement an EHS Management System. The use of mercury containing lamps and ozone depleting substances in refrigerants will be reviewed to identify whether feasible replacement materials are available, and associated phasing-out programme will be developed if necessary. An effective contractor management programme, particularly during the construction and fitting-out works, will be required as a risk management tool to minimise the risk of negative impacts. Disclosure of information and consultation In the context of the EBRD’s participation in the project, the Company will release locally a summary of relevant environmental issues associated with the project and summarise mitigation measures, action plans and other initiatives agreed. Monitoring and reporting The Company will monitor the environmental impact of its operations in accordance with national law and regulations. The Bank will evaluate the project's compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing annual environmental reports prepared for the project covering: (i) ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programmes, and (ii) the status of implementation of environmental mitigation and improvement measures. The Bank’s representatives will also conduct periodic site supervision visits when deemed appropriate. None. Andriy Dmitrenko Lyubov Tsymbal CFO Tel. +38 044 490 32 70 E-mail: LTsymbal@alba.kiev.ua