PROJECT DESCRIPTION Shangri-La Ulaanbaatar Hotel LLC (the Company or Shangri-La Ulaanbaatar Hotel) is a joint venture between IFC's existing clients: (i) Shangri-La Asia Limited (Shangri-La or the Sponsor); and (ii) MCS Holding LLC (MCS). The project is to develop and operate a 280-room, 5-star hotel in the city of Ulaanbaatar, the capital of Mongolia (the Project). PROJECT SPONSOR AND MAJOR SHAREHOLDERS OF PROJECT COMPANY The Company will be 75% beneficially owned by Shangri-La and 25% owned by MCS. Shangri-La, headquartered in Hong Kong, is a leading owner and operator of deluxe hotels and resorts primarily in Asia. Shangri-La is listed on the Hong Kong Stock Exchange.Incorporated in Ulaanbaatar in 1993, MCS is one of the leading private enterprises in Mongolia with subsidiaries operating in various business sectors, including: (i) energy and infrastructure; (ii) general manufacturing and services; (iii) information and communications; (iv) property development; and (v) food and beverages. TOTAL PROJECT COST AND AMOUNT AND NATURE OF IFC'S INVESTMENT The total project cost is estimated at $123 million. The proposed IFC investment is an A loan of up to $50 million for IFC's own account. IFC INVESTMENT AS APPROVED BY BOARD 50 million (USD) PRODUCT LINE IFC INVESTMENT (MILLION USD) 50 LOCATION OF PROJECT AND DESCRIPTION OF SITE The hotel will be part of an office, retail and hotel complex located on the east side of the Sukhe-Bahor Square, between the City Theatre and Peace Avenue, in the centre of Ulaanbaatar. ANTICIPATED DEVELOPMENT IMPACT OF THE PROJECT The Project's expected development impact includes the following:(i) Increased supply of hotel services: The Project will help meet the growing demand for hotel accommodation in the presently under-served 5-star hotel sector in Ulaanbaatar, Mongolia.(ii) Employment creation: The Project will create a significant number of direct and indirect job opportunities for the local communities.(iii) Benefits to the local economy and local linkages: The Project will help create demand for locally sourced materials, service, and labor, both during the construction and operation stages . The Project is expected to support small- and medium-sized enterprises, including a wide range of goods and service providers.(iv) Increase in domestic revenue and foreign exchange: The Project is expected to contribute to the domestic economy through increased tax revenues and foreign exchange inflow.(v) Private sector development: The presence of the Shangri-La Hotel in Ulaanbaatar will send a positive signal to other foreign investors who are considering investments in Mongolia where there is limited private sector activity. The Project is also expected to have an impact on the upgrade and development of retail and travel-related infrastructure in the city of Ulaanbaatar. IFC'S EXPECTED DEVELOPMENT CONTRIBUTION IFC's additionality includes: (i) long-term financing, which is critical for the successful completion of the Project; (ii) demonstration effect by supporting Ulaanbaatar's first 5-star hotel; and (iii) long-term partnership with IFC's clients (a local enterprise and a key hospitality player) in Mongolia, an IDA country. ENVIRONMENTAL AND SOCIAL ISSUES - CATEGORY B This is a Category B project according to IFC's Procedure for Environmental and Social (E&S) Review because a limited number of specific and reversible E&S impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. Key E&S issues reviewed included the following: environmental and social management system; waste emission and discharge to the environment - air, water and subsurface; labor and working conditions; life and fire safety and emergency preparedness and response; community and occupational health and safety; water and energy use and efficiency; land acquisition; and community engagement.

ACCOUNTABILITY MECHANISM OF IFC The Compliance Advisor Ombudsman (CAO) is the independent complaint mechanism and fact-finding body for people who believe they are likely to be, or have been, adversely affected by an IFC or MIGA- financed project. If you submit a complaint to the CAO, they may assist you in resolving a dispute with the company and/or investigate to assess whether the IFC is following its own policies and procedures for preventing harm to people or the environment. If you want to submit a complaint electronically, you can email the CAO at CAO@worldbankgroup.org. You can learn more about the CAO and how to file a complaint at http://www.cao-ombudsman.org/