Financed ProjectsADA Almali Retail Chain

Identification Code:

OP/06/0551

Total Operation Cost:

0

Maturity:

72 months

Operation Status:

Description and Purpose of the Operation:

"BSTDB signed a USD 9 million loan to ADA Ticaret Ltd. (the "Borrower", or the "Company"), ADA Muelkiyyet Ltd. and ADA Nagliyyat Ltd. ( the "Co-borrowers") (ADA all together) for establishing a chain of discount stores in Baku – Azerbaijan, for trading in food products and accompanying goods at low prices. At mid-2007, 18 stores are already operational and by the end of the same year, the number of stores will reach 35. About 50 more retail stores are projected by end of 2009, with a total yearly turnover forecast to reach around USD 300 million. The Operation aims to replicate in Azerbaijan the success experienced by such discount stores in other countries. It entails acquisition of land and existing sites for the retail chain, building and renting new stores and refurbishing the existing sites, furnishing the stores with the necessary equipment, construction of a warehouse/distribution centre, acquisition of transportation vehicles, as well as purchase of supplies for the stores. The Operation represents an investment in the Azeri non-oil sector, investment undertaken by Russian and Azeri investors."

Countries of Operation:

Azerbaijan (100,00 %)

Financial Product:

Loans

Sector:

Consumer Staples

Domain:

Private

Borrower/Client:

- ADA Ticaret Ltd. (Borrower) (the operator of the retail chain) - ADA Muelkiyyet Ltd. (Co-borrower) (the property owner) - ADA Nagliyyat Ltd. (Co-Borrower) (the transport company) - ADA Ticaret Ltd., the operator of the retail chain, was established in Baku in October 2005 for the purpose of this Project. The three borrowers will be jointly liable for the BSTDB Loan.

Co-Financiers/Participants:

IFC

Guarantors/Sponsors:

A&DA Holding GmbH (Austria) based on the LA ""Sponsors"" means collectively, the Azerbaijani Guarantor and the Russian Guarantor; ""Azerbaijani Guarantor"" means Mr Fuad Akhundov, a citizen of Azerbaijan and a resident of Azerbaijan and the Russian Federation; ""Russian Guarantor"" means Mr Sergei Ivashkevich, a citizen and resident of the Russian Federation; A&DA HOLDING GMBH a company established and existing under the laws of Austria (the ""Guarantor"").

Developmental and Regional Cooperation Impact:

The Operation is in line with the priorities set in BSTDB’s Business Plan for 2007-2010, and with the Bank’s Country Strategy for Azerbaijan, where it is stated that "the Bank will focus on small and medium scale projects in the non oil sector with development and cooperation Impact". The loan facility would: be additional, given that long-term financing is hardly available in Azerbaijan for private investments in the non-oil sector; support a private investment in a sector enjoying good growth in Azerbaijan; help bring a positive social development impact; promote co-financing with local and foreign investors; create positive job effects both during the construction and the operation phases.

Environmental Classification and Impact (summary):

Screened as B0. The Environmental Assessment concluded that environmental, health and safety impacts are very limited, site- specific, and readily mitigated. Overall, the Borrower has a very good EH&S performance and is taking steps to further improve it. The Borrower is required to remain compliant at all times with applicable EH&S rules and regulations; and report on annual basis on overall EH&S performance.

Operation Leader:

General Industries, Transport, Tourism 2

E-mail:

gitt2@bstdb.org