Listed in the Mexican Stock Exchange since 2010, Proteak is engaged in the production of (i) Forestry Stewardship Counsel (“FSC”) certified teak in Mexico, Costa Rica and Colombia; (ii) FSC certified eucalyptus in Mexico and (iii) Medium Density Fiberboard (“MDF”) in Mexico. The wood used for the MDF plant is supplied by Proteak’s eucalyptus plantations. Proteak’s main shareholders are some of the Mexican pension funds

The total project cost is estimated at US$ 74 million.

IFC will provide an up to US$ 37 million senior loan for its own account and mobilize an up to US $28 million senior loan from parallel lender(s).

37.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	37.0
Equity

* These investment figures are indicative

Proteak is based in Mexico and has subsidiaries in Costa Rica and Colombia. The expansion of the Company includes rural areas in the states of Veracruz, Tabasco and Chiapas in Mexico.

The Project will support the development of Mexico''s forestry supply chain addressing the country''s deficit in wood fiber in a cost effective manner.

By supplying domestic eucalyptus to a MDF plant that will substitute imports, the Project will reduce carbon emissions and costs associated with transport of wood from abroad and provide much needed rural development in Mexico.

The Project will support the expansion of certified forests, helping with the reforestation of degraded areas and contributing to reduction of carbon emissions through carbon sequestration.

Although commercial banks are active in the agribusiness sector in Mexico, they are reluctant to provide long-term financing to forestry companies with limited existing cash flow generation. IFC will provide a tailor-made long-term financing, with a repayment profile in line with the company''s projected cash generation.

IFC will mobilize funds from parallel lender(s), sharing its expertise in the forestry sector.

Through the implementation of its E&S standards, IFC will encourage the company to strengthen its engagement with stakeholders, workers grievance mechanisms, management of pesticides and policies for its security personnel.

This is a Category B project with limited E&S risks and impacts which can be avoided or mitigated through established forest management practices. Environmental and social performance of the company has been satisfactory and currently has an Environmental and Social Risk Rating (ESRR) of “B-2 Satisfactory” and it is noted that the company has made steady improvement in its environmental and social management systems; employment practices and workforce safety in plantations; and continued conformity with internationally-recognized forestry practices to conserve biodiversity. The company has achieved Forest Stewardship Council (FSC) certification for all of its teak and eucalypts forests and recently was certified to the Verified Carbon Standard (“VCS”) for its teak plantations in Chiapas, Nayarit and Tabasco enabling it to accrue and sell roughly 50K TCO2e of carbon credits annually. External audits and Annual Monitoring Reports (AMR’s) confirm use of good management practices including proactive monitoring systems, attention to local recruitment and work safety practices, safe handling of pesticides, improving engagement with surrounding communities, appropriate land acquisition and rental practices, and reforestation of previously cleared and degraded pastures. Key risks reviewed during the appraisal included: level of stakeholder engagement, transportation safety, use of security personnel, and effectiveness of its management of conservation and restoration practices. All IFC Performance Standards are applicable.

Please refer to the related Environmental and Social Review Summary (ESRS) document for this project.

Please refer to the Environmental and Social Action Plan (ESAP) tab in the related Environmental and Social Review Summary (ESRS) document for this project.