Volga-Balt Transport Holding Ltd

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The EBRD is considering providing an $80 million long-term loan to Volga-Balt Transport Holding to finance part of the acquisition costs of ten dry cargo newbuildings of 5,200 dwt each. The Project is part of the fleet modernisation programme of the Sponsor, in order to continue to offer reliable and environmentally more efficient shipping services to its clients for the transportation of Russian export cargoes and to meet its commitments under freight contracts with cargo owners. The Project Vessels will operate in the dry cargo segment of the European-Russian short-sea trades which include the Baltic Sea, North Sea, the Continent and the Black Sea, Sea of Azov to ports of the Mediterranean/North Africa and the Continent. The Project will support the following key transition objectives: 1) Enhancing transparency and corporate governance: The Sponsor is to streamline the group structure and will adopt the Russian Corporate Governance Code through its Russian subsidiaries. 2) The Client will adopt measures to improve its environmental and safety standards, including implementation of ISO 14000 environmental certification as well as the introduction of a Greenhouse Gas accounting and reporting system. 3) The Company will implement a restructuring of the Group which will allow it to use resources more efficiently and to improve its competitive position. Volga-Balt Transport Holding (VBTH) owns and operates a fleet of 594 vessels, including general cargo, tankers, tow boats, barges and passenger vessels. The company operates in four main market segments: short-sea transportation of dry cargo, inland transportation for dry and wet cargo, inland waterways cruises, and shipbuilding and ship repair. $80 million to be syndicated on a A/B loan basis. $130 million. The project has been categorised B under the Bank's Environmental and Social Policy 2008. The acquisition of new dry cargo vessels is not associated with significant environmental and social issues and will contribute to VBTH’s fleet renewal programme. The new vessels will be built to comply with all international environmental and health and safety requirements. The fleet renewal will help the Company further raise its environmental standards, improve fuel efficiency and reduce air emissions. An initial review has shown that new vessels are around 20 per cent more efficient than the average performance of the existing vessels operated by VBTH in the same category 8. This will result in carbon savings exceeding 2 gCO2/ton km. The Bank will support VBTH through a TC-funded assignment aiming at introducing in the Company a GHG accounting and reporting system according to an established international methodology (e.g., as proposed by IMO or similar). A corporate environmental and social review of VBTH has been undertaken to assess its capacity to implement the project in accordance with international maritime safety and environmental standards and the Bank's PRs. The review showed that VBTH is overall in compliance with regulatory requirements, EU environmental standards and international (including IMO, MARPOL and SOLAS) standards of maritime safety and environment protection and that it has appropriate systems and controls in place to manage environmental, health and safety and labour issues. To further strengthen its management capacity, VBTH has agreed to certify its environmental management system to ISO 14000 standards, formalise its emergency response plans as well as to develop a ship scrapping plan that takes into consideration IMO guidelines for the Safe and Environmentally Sound Recycling of Ships. VBTH will also publish information on its environmental and social performance and impacts as well as establish a grievance mechanism on its web site. The Bank will support VTBH through a TC-funded assignment aiming at introducing in the Company a Greenhouse Gas accounting and reporting system according to an established international methodology. Alexander Foley Head of Corporate Finance Transport Asset Management, OOO 4-th Dobryninskiy pereulok, bld. 8 (Business center Dobrynya, 4th floor) Moscow Tel. +7 495 933 0609 ext. 141 Mob. +7 911 228 7664 E-mail: a.foley@tamcom.ru