Ruscam-Kirishi

complete

The Project entails financing of Anadolu Cam’s expansion in the Russian and Ukrainian glass beverage container sector. It will include the construction of one additional furnace (120 thousand tonnes) and the cold repair and expansion of the existing furnace in the plant in Kirishi (St Petersburg); and the construction of one furnace at a brownfield plant in Odessa, Ukraine, with a capacity of 85 thousand tonnes. Contribution to post-acquisition restructuring needs of an existing operation This project entails Sisecam, a lead global player in the glass container sector, bringing a level of skills, training and manufacturing know-how to a company in Russia where these factors are urgently required. Kirishi in Russia has the potential to be competitive force in its region, as long as this company has the support of a Sponsor that is able to contribute technical expertise to ensure high quality and efficient production. The Bank’s financing will provide improved financial operations and greater corporate governance, including improved internal controls, IFRS accounting and reporting. Furthermore, the Sponsor will invest in improving the production process, increasing capacity and production assortment. Regional expansion In Southern Ukraine, where the brownfield Odessa plant is located there are no glass container producers. Through the Project, locally produced modern packaging should increase the access by Ukrainian brewers to similar standards of packaging available to large companies. The Projects will also facilitate the development of the wine, bottled water and non-alcoholic sector by providing them with tailor made packaging solutions that will allow them to grow and compete with western imports. Increased competition The Project would aim to expand glass packaging production to a region of Ukraine where at present there are no modern producers. In Ukraine, the existing glass producers cannot satisfy domestic demand and are located mainly around Kiev and do not have operations in the south of the country. The establishment and operation of the Companies’ plant with large capacities and top-notch quality will prompt existing players in Ukraine to upgrade their production in both quantitative and qualitative terms. Skills transfer Through its Russian and planned Ukrainian operations, the Sponsor is executing a strategy combining significant investment with high levels of training and expertise that enable it to introduce new standards of technology to the sector in Russia and Ukraine, specifically lightweight bottle technology. Ruscam-Kirishi and Ruscam-Odessa (“Companies”) majority-owned subsidiaries of Anadolu Cam, the largest producer of food and beverage containers in Turkey and a member of the Turkish SiseCam group. EUR 64.7 million long-term loan divided as follows: Both loans will also be available for disbursements in USD. EUR 107.9 million Screening category and justification The project was screened as B/1 requiring an environmental due diligence consisting of an Environmental Audit of the existing facility in Kirishi and the Brownfield site in Odessa and an Environmental Analysis of the proposed investment plan to ascertain future compliance with national and the EU environmental standards. Due diligence undertaken and outcomes The environmental and social due diligence was undertaken by an independent international environmental consultant and included visits to the sites in Russia and Ukraine as well as a top level environmental review of the existing facilities operated or under construction by the Group in Russia, namely the plants in Ufa, Pokrov and Krasnodar. During the due diligence meetings where also held with senior technical and production managers at the corporate level. Environmental and social impacts from the operation of container glass facilities can be readily assessed and are limited mainly to air and wastewater emissions. The environmental and social due diligence confirmed that the current and planned operations are in compliance with National environmental standards and the planned investment programme is structured to meet National and EU environmental standards. Although, the new investment projects are structured to meet EU environmental standards, some of the existing operations would not fully meet Best Available Techniques (BAT) as included in the EU IPPC BREF Note for new plants, notably in terms of NOx emissions. This issue was assessed further as part of the due diligence, and the measures planned by the Company, such as the use of low NOx burners and primary measure, coupled with the location of the Odessa and Kirishi plant will not result in material environmental and/or public health impact. Both plans will be fully complaint with National standards. In addition to limit dust emissions and in line with BAT requirements, the Company will install Electrostatic Precipitators (ESPs). Overall, the environmental and social due diligence confirmed that the two plants are being constructed to meet National and EU Environmental Standards and that the company is implementing the existing ESAP requirements at the existing facilities. The plants in Kirshi and Odessa will be designed and operated in line with similar plants operated in EU Member States. The Bank is working with the Company through the implementation of the proposed Environmental and Social Action Plan (ESAP) to improve future operations and ensure compliance with international best practices. Overall, the proposed project will further improve the environmental performance of the Company and allow for higher energy efficiency levels and future compliance with best international environmental standards and practices. The Bank will work with the Company through the implementation of a Technical Assistance project in Russia to further increase the collection of cullet and increase waste recycling and thereby energy efficiency in the sector. Based on the environmental and social due diligence an Environmental and Social Action Plan (ESAP) has been developed and is being agreed with the Company. This includes the development of a systematic approach to environmental issues at the Company and individual site level in Russia and Ukraine, including the implementation of an environmental, health and safety management system as well as further investments to reduce energy use as well as improve the abatement of air emissions and wastewater in line with best international practice. Implementation requirements None. Aytac Mutluguller, Deputy CFO Turkiye Sise ve Cam Fabrikalari A.S. Is Kuleleri Kule 3 34330 4 Levent, Istanbul Turkey