25021 - Sodrugestvo

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Summary of Proposed Investment

Project Number

25021

Company Name

United Trading A/S

Date SPI Disclosed

Sep 28, 2007

Country

Russian Federation

Industry

Agribusiness and Forestry

Projected Board Date

Oct 29, 2007

Status

Completed

Sector

Other Vegetable Oil Crops (Coconut, Rapeseed, Peanut, Sunflower, etc.)

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Dec 13, 2007
Signed : Jan 31, 2008
Invested : Feb 22, 2008

Project Description

United Trading A/S (or the company) is a holding of the Sodrugestvo group of companies, the largest importer and distributor of animal nutrition products in Russia. The company is developing local soy bean crushing capacity to capture additional processing margins, to optimize the efficiency of trade logistics, and to improve service to its existing clients, the Russian livestock producers. The project is to complete the construction of:

- the company’s own specialized agricultural commodities port in the Kaliningrad Region, Russia;
- two soybean/rapeseed crushing plants,
- an edible soybean oil refinery; and
- provide permanent working capital.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity	50.0

Development Impact

The company’s port presents a significant upgrade over existing facilities in Kaliningrad, utilizing modern equipment to efficiently load and unload freight vessels. By processing soybeans in its port, the company will be able to increase the efficiencies of logistics and improve service to its clients by reducing delivery times and improving product quality. In addition to improving its own operational efficiencies, the company plans to offer port services to third parties in Kaliningrad, thus provide benefits to other agricultural commodity traders.

Currently the company employs about 550 staff. It is expected that the project will generate a minimum of 100 additional positions, mostly unskilled. The company offers training especially for key operations management positions which do not have an equivalent in the local market.

The company is expected to be the largest local rapeseed buyer purchasing raw materials directly from local farmers once the rapeseed crushing facility is completed.

The company has begun to improve its corporate management, governance, and business transparency, including the adoption of IFRS reporting standards. The company understands the need to improve corporate governance further and is expected to attract independent international industry expertise to the Board.

IFC’s key contributions to the company’s development are expected to be as follows:

- advising the company on strategic and industry issues,
- improving corporate governance of the family-owned business through the proposed participation at the Board of Directors,
- providing and mobilizing long-term debt financing with terms appropriate to a capital-intensive project,
- providing industry and sector expertise.

This is a Category B project according to IFC’s Environmental and Social Review Procedures. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization will shortly be publicly available in the Environmental and Social Review Summary (ESRS) disclosed on IFC’s website (http://www.ifc.org/projects). The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that the client will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards.

Contacts

For Inquiries About the Project, Contact

For more information, contact Mr. Sergey Poliakov, Chief Financial Officer at the company’s office at:

65 Gagarin Street, Svetliy,
Kaliningrad Region, 238340,
Russian Federation,

Tel. + 7(4012) 30-55-44.

The hard copies of the ESRS and ESAP will be made available at the following location:

Svetly Urban District,
The Municipal Administration,
Sovietskaya str., Svetly city,
238340 Kaliningrad region,

Tel. (40152) 22333

The electronic versions of the ESRS and the ESAP will be available for public review on IFC’s website and the company’s website: http://www.sodrugestvo.com.

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. This document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC’s Policy on Disclosure of Information that went into effect April 30, 2006.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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