Project Bluebird

complete

Translated version of this PSD: Russian EBRD is considering an equity investment for up to USD 30 million and a bond subscription for up to USD 80 million in favour of Borets International Ltd (“Borets” or the “Company”). The proceeds of EBRD financing will be used to finance Borets’ investment and R&D programmes in Russia, including construction of a casting plant for production of stages and development of energy efficient automated solutions, to refinance existing indebtedness and to purchase shares of the exiting shareholder. Setting standards of corporate governance and business conduct The transition impact potential primarily stems from the EBRD’s support to further improve Borets’ corporate governance. A detailed Corporate Governance Action Plan will be developed as part of EBRD equity financing. Demonstration of new products and processes Development of new products is one of the important success factors for Borets. The Company has the dedicated Research and Development Centre in Moscow and its research capacity stands-out compared to the local competitors. With a stable shareholder base and balance sheet structure, Borets will be in a position to continue and enhance its R&D activities to develop new products for the local oil and gas industry. Borets International Ltd, a holding company registered in BVI, is a leading Russian vertically-integrated manufacturing and services company designing and manufacturing electric submersible pump systems and other equipment used in artificial lift and providing a range of related services. Total amount of EBRD finance package is up to USD 110 million. This includes: (i) Bond subscription of up to USD 80 million. (ii) Equity subscription of up to USD 30 million. EUR 496 million. Categorised B. The Bank has an existing relationship with Borets and a good understanding of the Company's environmental and social performance. Previous due diligence has included visits to the main manufacturing facilities by independent consultants, and the drafting and agreement of detailed Environmental and Social Action Plans (“ESAP”) designed to bring Borets’ operations into compliance with the Bank’s Environmental and Social policies in place at the time of previous transactions. The Company is implementing the existing ESAP action items and has provided appropriate reporting to the Bank with back-up data and documentation to verify progress against agreed targets and performance. To date, this progress has been satisfactory and the Bank has noted that the Company's EHS management has been significantly strengthened throughout the period of the Bank's relationship, and that the Company has introduced, and continues to introduce, international best practice as standard. In relation to the current transaction, an independent Environmental and Social Due Diligence was undertaken in 2012. This due diligence comprised review of the extensive recent due diligence reports; review of findings of a visit to the main Lemaz facility carried out by Bank staff in 2012; and review of the extensive monitoring reports supplied by the Company. The independent due diligence confirmed progress against the existing ESAP, and that this ESAP was sufficient to result in compliance with the Bank’s current policy requirements. No additional ESAP action items are therefore required for the current transaction. None. Mr. Christopher Mackenzie Moldavskaya str., 5 Moscow, Russia, 121467 Tel: +7 (495) 660-21-90; Fax: +7 (495) 660-21-91 E-mail:office@borets.ru