The majority of shares (53%) of Altyn Ajydar (“AA”) are owned by Mr. Pavel Terekhov, President, and the rest of the shares are owned by his family members (the “Sponsors”). IFC provided financing of $0.3 million to AA in 1999 for the modernization and expansion of its existing cardboard packaging facility and $1.4 million in 2005 to set up a new corrugated packaging line with a capacity of 10 million square meters near Bishkek. In 2008, IFC committed a third loan of $1.6 million to finance the production of alucobond panels and insulated glass window units, which was partially disbursed and the remainder was cancelled in 2010 due to declining demand for building materials during the global economic slowdown. IFC projects were implemented successfully, as AA improved its operating performance, increasing its sales from $1.6 million in 2003 to $5.4 million in 2010, by more than 3 times. AA is currently the leader in the corrugated packaging industry in the local Kyrgyz market. AA now wishes to expand its production to neighboring Kazakhstan in order to be closer to its main market and clients. Production in Kazakhstan will be undertaken by Intermultiservices (“IMS”), AA’s wholly-owned subsidiary in Kazakhstan.

The total cost of the new project is estimated at around $4.5 million, which will be financed by an estimated contribution from the Sponsors and AA of $2.25 million and a senior IFC loan of $2.25 million for IFC’s own account to finance the AA’s corrugated packaging production in Kazakhstan.

2.25 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	2.25
Equity

* These investment figures are indicative

The project is located in facilities owned by the IMS in Alma-Aty, Kazakhstan with suitable road, power, water and security infrastructure.

The proposed project will help AA expand into Kazakhstan and improve its competitiveness with the production of multi-layer packaging products through the use a new and more efficient corrugated packaging line in a location that is closer to its client base in Kazakhstan. Moreover, the project will have a demonstration effect for other SMEs, as AA has been a successful company in the region. Besides improving the company’s competitiveness, the investment is expected to result in an estimated additional employment of 100 workers in Kazakhstan.

IFC views this investment as a step to further collaboration with a valued client in frontier markets. As it grows in Kazakhstan, AA will be able to further benefit from IFC's sector expertise and advice on corporate governance and in particular on the environment, where AA is implementing a corrective action plan in occupational health and safety and labor issues and is gradually making some progress.

The proposed project is with an existing Sponsor with which IFC has worked to increase environmental, social and health & safety management performance over the investment period. The project has been evaluated on its own merits, but the appraisal also took into account the company’s environmental, social, health and safety management of existing facilities and progress in implementation of corresponding action plans. The proposed project will have minor, and easily mitigated environmental, social and health & safety impacts related to Performance Standards 1 through 4, and it has been given a B categorization. The proposed project will be required to comply with the applicable Kazakh environmental and social laws and regulations, the IFC Performance Standards and the applicable generic and sector-specific WBG’s Environmental, Health and Safety (EHS) Guidelines.