Linstow Varner SIA (the "Company") is a wholly owned subsidiary of Linstow Varner AS (Norway), which is in turn owned 50% by Linstow International AS (Norwegian real estate company), 25% by Varner-Gruppen AS (the largest textile retailer in Norway), and 25% by Hakon Gruppen AS (grocery chain owned by ICA/Royal Ahold). Linstow International in turn is owned by the Anders Wilhelmsen Group which, among others, is one of the largest shareholders in Royal Caribbean Cruise Lines.

Linstow Varner SIA owns and operates retail centers in Latvia, including "Mols", "Dole", "Minsk", and "Centrs". As part of the Project, the Company is developing the Riga Central Railway Station as well as an abandoned industrial site in Riga ("Alfa") into modern efficient retail parks. Linstow Varner SIA also holds a 10% ownership stake in Narvesen Baltija SIA that operates kiosks, perfumeries and restaurants in the centers as well as other locations in Latvia. Finally, the Company holds 40% of Securitas Latvia SIA that handles security operations in the malls.

Varner Gruppen (through through their retail outlets Derssmann, Cubus and Bik Bok) and Hakon Gruppen (through RIMI) occupy close to 25% of the retail space in the existing centers in addition to outlets outside the Linstow Varner centres. A shareholder agreement between the three Sponsors (Varner, Hakon and Linstow), give Varner and Hakon first right of refusal on competitive terms for retail space in new centers. Conversely, Linstow International AS has a first right of refusal on Hakon and Varner’s 25% stakes in Linstow Varner AS.

The paid in share capital of Linstow Varner SIA is LVL13 million (US$ 21.6 million). In addition, the Sponsors have provided subordinated loans for a total of about US$35 million as of year-end 2000.

The management team of Linstow Varner SIA is composed of Latvian and Norwegian executives. The aim is to maintain a strong management team in Riga, and to support it by the development and operational experience of Linstow Varner AS in Norway. Furthermore, the Board members have a varied and highly valuable experience within the real estate and retailing sectors. They also have extensive knowledge of the Baltic region, especially Latvia and Riga, gained through their long experience in the region. Mr. Petter Salmonsen is the General Director of the Company. Previously, he was a director in Linstow ASA, responsible for shopping mall development and operations in Norway.

The total Project cost is estimated at about US$148 million, including contingencies, as well as an estimated US$15 million and US$11 million of interest during construction on the external debt and subordinated shareholder loans, respectively. IFC has been invited by the Sponsors to be the lead financer. On a preliminary basis, it is proposed that IFC provide a US$12 million A Loan and a US$8 million C Loan for its own account. An additional US$70 million would be raised in the form of a B Loan (US$20 million) and parallel loans for the account of commercial banks and NIB. The remaining would be financed through a combination of cash flow from operations and equity/subordinated loans from the Sponsors.

25.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	25.0
Equity

* These investment figures are indicative

During the period 1997-2000, Linstow Varner SIA purchased, renovated and started operation of four modern shopping centres in Riga. The total retail area for these centres is about 29,000 m2. As of year end 2000, the total investment was about US$80 million, nearly all (about US$75 million) of which was financed through equity and subordinated loans from the Sponsors.

The Company now plans to expand their retail operations in Riga with an additional 100,000 m2 of retail space. Two new sites have been purchased and one of the existing centers will be expanded. The Project involves the redevelopment of an old and abandoned industrial site ("Alfa Retail Park"), promotion of public/private partnership in renovating and improving the old Riga Central Railway Station, and solving traffic problems that congest the Railway station square, as well as developing further successful western retail concepts (Mols), promoting competition and setting industry standards for retailing in the Baltics.

This is a category B project according to IFC’s environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. IFC’s Technical and Environmental Department staff’s review of this project consisted of appraising technical, environmental, and social information submitted by Linstow Varner. The following potential environmental, safety and health impacts of the project were reviewed: Alfa Center and Riga Railway Station site contamination due to past practices; noise, dust, and traffic disturbance during construction; sewage and solid waste handling and disposal; hazardous materials management; and fire protection and life safety.

The Sponsor has presented plans to address these issues and to demonstrate that the proposed project will comply with applicable Latvian laws and regulations and IFC/World Bank requirements. Accordingly, IFC concludes that the proposed project will meet the applicable World Bank/IFC environmental and social policies and the environmental, health and safety guidelines.
Location of environmental documents In locally affected community
All the environmental documents are located at the Company''s administrative HQ in Riga (see contact address below). In addition, the ERS (translated to Latvian) will be posted at the gates of the three project sites as well as on the bulletin board of the central library in Riga.