The Group has two shareholders: (i) Weatherford International Limited (38.5%); and (ii) the Tangent Fund Limited (61.5%), a Cayman Islands fund. Tangent Fund Limited is controlled by two reputable businessmen who have been in the oil services equipment manufacturing business since 1995. Weatherford International Limited (“Weatherford”) is one of the large global providers of products and services for the production of oil and natural gas. Weatherford operates in over 100 countries and employs more than 40,000 people worldwide. In 2008, the company had earnings of $1.4 billion on revenues of $9.6 billion.

The total project cost is expected to be $ 230 million. IFC has been asked to provide an A Loan of up to $50 million. EBRD has signed a loan agreement with Borets for a $140 million in an A and B Loan Facility.

50.0 million (USD)

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

* These investment figures are indicative

The funds for the project will be allocated to the Group’s various manufacturing and servicing facilities in Russia and overseas. The capital expenditure program in Russia will involve capacity expansion and modernization programs among the seven manufacturing and seven service centers in Russia. On the international side, the capital expenditures and working capital requirements will depend on which contracts the Group wins. However, the focus on the international side will include the following countries: Mexico, China, Indonesia, Congo, Nigeria, Angola, Egypt, Ecuador, and Columbia.

The expected development impacts from the transaction include: Climate Change Mitigation: The Project will help improve the Group’s product offering through the planned roll out of more efficient submersible pumps, thereby contributing to significant energy savings and CO2 emission reductions. Employment generation: Borets is a major employer in the Russian regions. In the last 18 months, Borets has transferred more than 2,000 jobs from Moscow to various regional manufacturing sites, with the objective of making these global centers of excellence in their respective product lines. In many cases, the Group’s factories and service centers are the largest employers in their respective cities or regions. The Group companies are operating in four of Russia’s frontier regions, where they employ about 1,600 people. South-south investment: The project will help Borets expand its manufacturing and services operations in other developing countries such as Mexico, China, Indonesia, Congo, Nigeria, Angola, Egypt, Ecuador, and Columbia Support of small and medium businesses: Borets supports local businesses through the purchase of various contract services which total $33 million annually, of which close to 80% corresponds to transportation services that involve a large number of small businesses. Contribution to tax revenues: Borets annually pays about US$90 million in taxes to the government, of which about 75% is in the form of value-added taxes (VAT).

Long-term financing: IFC will provide long-term financing to support the Group’s working capital needs, geographical expansion and funding diversification plans. The longer grace period of the proposed IFC loan would partially offset higher cash flow requirements during the next 2-3 years for developing the international operations as well as higher repayments during the same period due to the expected shorter maturity of the EBRD B loan. Supporting South-South Investments: Given the restrictions on the geography where the EBRD proceeds can be used, among the potential financial institutions the Group has contacted, IFC is the only one which can provide funding of this size and tenor that can be used outside the CIS. IFC’s direct lending to BIL would simplify funds transfer to the international operations, which could otherwise become complicated if provided through the Group’s Russian operations. Standard Setting in Environmental and Social Practices: Borets is in the process of upgrading its environmental and social policies and procedures in its Russian and international operations, and IFC will help the Group to meet the World Bank Group standards in each of the countries it operates in. Guidance to Improve Insurance Practices: IFC will help Borets to develop and structure a better insurance program, including risk management practices in its Russian and international operations in order to move closer to the best international practices.

The project is a category B investment according to IFC’s Environmental and Social Review Procedure. The major Environmental and Social issues of this project are associated with occupational health with regard to workplace air quality; environmental pollution with regard to air emissions; community health with regard to ambient air quality; and BIL’s capability to manage the environmental, health and safety performance of the Group as the whole.
The project is in material compliance with the regulatory requirements of the Russian Federation. Implementation of the specific measures agreed in the Environmental and Social Action Plan (ESAP) will ensure compliance with IFC''s environmental and social Performance Standards.

A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS) disclosed together with the ESAP through IFC’s external website: http://www.ifc.org/projects

The environmental documentation will be made available on the company’s website: http://www.borets.ru