The project sponsor is Mr. Liu Yi Chuan, a Hong Kong citizen and entrepreneur who operates a number of successful businesses in China and abroad. Mr. Liu is a 100% owner of Fenglin International BVI, a private company created in 2003, which owns the project company. Mr. Liu has been in the MDF production business since 1995 through his shareholding in Nanning Sanyuan Property Development Company Ltd. Fenglin International controls two subsidiaries: the project company located in the city of Nanning, China and Guangxi Baise Fenglin Fiberboard Co., Ltd. Located in the city of Baise, China. Fenglin has been producing MDF boards since 1995. At Baise site, the MDF production started in December 2003.

The estimated total project cost is $61 million. The proposed IFC investment would be up to $35 million comprising an A-loan of up to $18 million, a B-loan of up to $14 million and equity of up to $3 million. The remaining project financing amount of $26 million will include equity in the form of internally generated cash and shareholder’s subscription.

25.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management	4.0
Guarantee
Loan	15.0
Equity	6.0

* These investment figures are indicative

The project site is located in Baise, Guangxi Province, which is approximately 240 km West of Nanning. Baise is a predominantly rural and less developed province in Southern China with vast forest resources.

This is a Category B project according to IFC’s Environmental and Social Review procedure. Environmental, social and health and safety issues which may be associated with this project and which will be reviewed during project appraisal include: siting and land acquisition process for the manufacturing sites and plantations; sustainable management and independent certification of plantations and other wood sources, including appropriate selection and use of agrochemicals; minimization of fossil fuel use by energy efficiency measures, use of waste wood as fuel and cogeneration of heat and power; emissions to air and water; fire protection and emergency response; worker health and safety including exposure to dust, fume and noise, and health, safety and environmental management systems.
Location of environmental documents in locally affected community
The environmental document Environmental Review Summary (ERS) will be available at the company’s headquarters. (See the company’s address below). In addition, the ERS will be available at the factory gates at Guangxi Baise Fenglin Fiberboard Co., Ltd in the city of Baise.

The project will have a significant development impact by: - bringing the world-class technology and supporting an expansion of a privately-owned competitive producer of MDF in China; - helping the company bring innovative, lower-cost value-added products to the market; - helping the company establish, develop and manage forestry assets in a long-term and ecologically sustainable way, thereby reducing pressure on the natural forests; - supporting the growth of the less developed Guangxi province, where the company operates; - supporting the job creation in the city of Baise, both in the company’s downstream operations and forestry business; - providing a major source of income to around 2,000 subsistence forestry farmers; - helping the company align its operations and internal policies with international standards, thereby enhancing its access the international financial markets and setting the stage for a future IPO. Following IFC’s reporting requirements, the company has its statements prepared and audited according to IFRS by Deloitte Touche Tohmatsu. IFC Role: - Develop project’s in China’s Less Developed Provinces: In the context of international investors still cautious about investing in poorer provinces and less-known and smaller cities, IFC has a clear role in supporting a competitive private entity in one of the most under-developed areas in China. - Support a Successful and Environmentally Responsible Private Enterprise: IFC will provide long-term financing best suited to the company’s capital expenditure and currency needs. The company owns and develops plantations in Guangxi province, which has vast forestry resources (56% of the province is covered with forests). IFC’s involvement in the project will require the company and the Guangxi province’s commitment to long-term sustainable forestry practices. IFC will seek to raise grant funding to help the company with independent forest certification. - Technical Services: As part of its technical appraisal, IFC is helping the company further improve its operational efficiency. As a prospective shareholder and lender to Fenglin, IFC would assist the company align its policies with best international practices in corporate governance, environmental and social matters. - IFC will seek to mobilize financing from banks and other financial institutions under its B-loan program. IFC would introduce the company to international banks and financial institutions; IFC’s presence would provide comfort to prospective investors and lenders and is expected to enhance the company’s ability to access the international capital markets and eventually launch an IPO.