Indorama Ventures Regional Blue Loan Project (RRP REG 54333)

DETAILS OF IMPLEMENTATION ARRANGEMENTS

A. Regulatory Framework

1. Indorama Ventures Global Services Limited (IVGS) is a wholly owned subsidiary of Indorama Ventures Public Company Limited (IVL), which is the holding company for the Indorama Ventures group (IVG). The Asian Development Bank (ADB) loan and a parallel loan to be provided by the Leading ’s Private Infrastructure Fund and administered by ADB will be made to IVGS, with IVL guaranteeing the loan. IVG is a -based global integrated chain manufacturer and distributor of diversified products, including polyethylene terephthalate (PET), purified terephthalic acid, , ethylene glycol, and polyester . It is the world’s largest integrated PET producer, operating 119 manufacturing facilities in 33 countries across 5 continents: Asia, , South America, , and . As a global intermediate producer and one of the largest vertically integrated polyester value chain producers in the world, IVG serves world-class customers in diversified end-use markets, including food and beverage, personal and home care, health care, automotive, textile, and industrial.

2. In the industry, the norm is to have long-term volume contracts with customers, typically 1 to 3 years while the pricing is adjusted monthly as per benchmark prices and according to an agreed mechanism. CONFIDENTIAL INFORMATION DELETED.

3. CONFIDENTIAL INFORMATION DELETED.

4. With increasing business and international operations, IVG is committed to comply with all relevant government instructions, statutory requirements, and laws concerning all aspects of its businesses. It is also committed to meeting and surpassing the environmental laws and regulations pertaining to each business and region, with periodic analysis and third-party inspection conducted at each plant. IVL’s audit committee reviews, on a quarterly basis, the status of compliance with all applicable local and national laws and regulations in countries where the company and its subsidiaries operate, and reports significant compliance issues to the board for its information.

B. Management

5. IVL has a well-diversified board of directors with corporate governance systems in line with listing requirements of the Stock Exchange of Thailand. IVL’s board consists of 16 directors comprising 6 executive directors, 2 nonexecutive directors, and 8 independent directors. Five directors are from the Lohia family.

6. The board has delegated supervisory power to committees, including the (i) audit committee; (ii) nomination, compensation, and corporate governance committee; and (iii) sustainability and risk management committee. The board closely monitors the management and implementation of business plans to achieve targets. The board also sets internal controls and audit procedures, including risk management. IVL recognizes the importance of leadership development, and it is working to implement a structured and formalized talent management system. IVL also has a succession plan for its chief executive officer and key management team, taking into consideration knowledge, potentiality, and performance evaluation.

7. The board members represent diverse nationalities, genders, ages, and skills. IVG’s policy does not discriminate against females, and selection is based on availability and 2

qualifications. The board structure is appropriate in relation to the size of IVG; its geographic spread; the number of executive, nonexecutive, and independent directors; and qualifications in terms of knowledge and expertise. The structure also provides a fair balance of power and effective management monitoring. IVG intends to maintain this broad base of knowledge and experience when it searches for new directors.

8. IVG has well-experienced senior management who have extensive managerial and technical knowledge in the industry. IVG’s rPET business will be integrated into its well-established PET segment.

C. Operation Arrangements

9. Revenue structure. IVG’s revenue structure can be broken down into three strategic segments: manufacture and distribution of (i) PET—solid-state polymerized chips and PET preforms, closures, and blown bottles; (ii) feedstocks—purified terephthalic acid, paraxylene, isophthalic acid, ethylene oxide, and ethylene glycol and other feedstocks; and (iii) fibers—fibers and yarns. While there are varying levels of integration among the segments (including sales of finished goods), the segments are managed separately because they require different technology and marketing strategies. Inter-segment pricing is determined on an arm’s length basis. Revenues of each segment are shown in Table 1.

Table 1: Revenue Structure of Indorama Ventures Public Company Limited by Strategic Segment 2017 2018 2019 Share of Share of Share of Total Total Total Amount Revenue Amount Revenue Amount Revenue Segment (B million) (%) (B million) (%) (B million) (%) PET 145,760 51 182,415 53 196,047 56 Feedstocks 115,161 40 147,296 42 132,911 38 Fibers 81,065 28 99,207 29 107,059 30 Eliminations and unallocated (55,654) (19) (81,747) (24) (83,325) (24) Total 286,332 100 347,171 100 352,692 100 ( ) = negative, PET = polyethylene terephthalate. Source: Indorama Ventures Public Company Limited financial statements.

10. Operation and maintenance. At all production facilities, IVG conducts regular inspections, preventive maintenance, and replacement of obsolete parts or equipment to avoid breakdown incidents, and minimize unplanned or prolonged shutdowns.

11. Recycled polyethylene terephthalate. In the PET recycling process, the post-consumer PET bottles are first compressed in bales and brought to the recycling facilities. The bottles are then mechanically sorted, labels and enclosures are separated from bottles, and the bottles are sterilized using thermal processing. Bottles are washed and cleaned to remove any impurities, and then crushed into small flakes. Bottle flakes are examined before they are melted to become rPET resins that can be further processed to make polyester fibers. These resins and fibers can be further converted to make a diverse range of products, such as beverage bottles, sportswear or accessories (e.g., shoes, bags) made from rPET fibers, home furnishings (e.g., pillow stuffing), and personal hygiene applications (e.g., diapers) made from rPET filament.

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D. Verified Blue and Green Loans

12. The entire ADB loan will be externally verified as a green loan based on the Green Loan Principles.1 Furthermore, the majority of the loan that will be utilized for IVG’s rPET facilities will be externally verified as a blue loan, following the Blue Natural Capital Financing Facility Blue Bond Guidelines,2 and will also be assessed against ADB’s Oceans Finance Framework once the framework is operational and if it demonstrates a significant and quantifiable contribution towards its objective.3 The loan will be ADB’s first internationally verified nonsovereign blue loan.

13. Proceeds of the blue and green loan will be used to finance or refinance, in whole or in part, IVG’s new or existing blue and green projects. IVG’s blue projects include PET recycling projects which significantly contribute to the prevention of marine litter. IVG’s green projects include renewable energy (e.g., rooftop solar, solar street lighting) and energy efficiency (e.g., retrofit of facilities or equipment to save energy and reduce greenhouse gas emissions) investments.

14. Loan verification. ADB will engage an independent verifier to provide a third-party verification report that the loan conforms to the Loan Market Association and/or Loan Syndications and Trading Association (LSTA) Green Loan Principles (footnote 1) and is consistent with the relevant criteria of ADB’s Oceans Finance Framework (once the framework is approved) (footnote 3). The report will verify that (i) the use of proceeds and project selection comply with the applicable criteria, (ii) the proceeds of the loan have been committed to the nominated purposes, and (iii) annual reporting requirements are established.

15. Post-issuance annual reporting. IVL will provide annual reports (i) confirming that it has not disposed of or otherwise refinanced the underlying assets; and (ii) presenting operational performance details, such as the average volume of IVL’s recycling capacity in respective countries, and annual greenhouse gas reductions from the PET recycling facilities.

E. Project Performance Monitoring, Reporting, and Evaluation

16. IVGS is expected to submit quarterly unaudited unconsolidated management accounts for the first three quarters, and annual audited unconsolidated financial statements to ADB. IVL is expected to submit quarterly unaudited consolidated and unconsolidated financial statements for the first three quarters, and annual audited consolidated financial statements to ADB. IVL also has a rating from Thai Rating and Information Services that is monitored quarterly.

17. ADB will monitor IVL and IVGS using information from its own sources, the public domain, and their reports, e.g., annual report. IVGS will provide information to track development impact based on the performance indicators established in the design and monitoring framework. Requirements for reporting on development impact and safeguards will be included in the

1 The Green Loan Principles are based on the Green Bond Principles. Loan Market Association, Asia Pacific Loan Market Association, and Loan Syndications and Trading Association. 2018. Green Loan Principles: Supporting Environmentally Sustainable Economic Activity. London; and International Capital Market Association. 2018. Green Bond Principles: Voluntary Process Guidelines for Issuing Green Bonds. Paris. 2 Blue Natural Capital Financing Facility. 2019. Blue Bonds: Financing Resilience of Coastal Ecosystems—Key Points for Enhancing Finance Action. Gland, Switzerland. 3 The Oceans Finance Framework has the objective of reducing marine debris and/or associated impacts to marine life, coastal livelihoods, and human health. It has been approved on 29 October 2020. 4

financing agreement.