23882 - Taca PDP Financing

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Summary of Proposed Investment

Project Number

23882

Company Name

Atlantic Aircraft Holding Ltd

Date SPI Disclosed

Mar 15, 2005

Country

El Salvador

Industry

Infrastructure

Projected Board Date

Apr 18, 2005

Status

Completed

Sector

Air Transportation

Date Revised SPI Disclosed

Jul 27, 2005

Department

Regional Industry INF LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : May 11, 2005
Signed : Jun 3, 2005
Invested : Jul 21, 2005

Project Description

The investment is an IFC revolving credit facility (the Facility) of $30 million to Grupo Taca for the benefit of Taca International Airlines S.A. (a Central American international airline company headquartered in San Salvador, El Salvador) and other members of Grupo Taca (Taca). The Facility will be used for pre-delivery payments (PDPs) towards the purchase of Airbus A-320 family aircraft (which include A-319s, A-320s and A-321s). Taca currently operates 111 daily flights to 35 destinations in 19 countries, servicing its passenger base in North America, Central America and South America, from its hubs at San Salvador (El Salvador), San Jose (Costa Rica) and Lima (Peru), respectively. The project is part of an ongoing fleet modernization program that Taca began in 2000, resulting in a current average age of 3.3 years for Taca’s fleet.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

Development Impact

Taca’s network and proposed expansion is geared towards providing safe, efficient and low cost service to and from Central America. The company has substantially reduced the cost of air travel in Central America and, through efficient connections, has made the region accessible both to business and leisure travelers. In addition, Taca provides critically needed service to the Central American diaspora by providing them easy access to their home countries. Taca’s developmental role is equally well highlighted via Aeroman, an affiliated company, through and for which, Taca has trained and employed hundreds of highly skilled mechanics and technicians. Aeroman is Latin America’s only ISO 9001:2000 maintenance, repair and overhaul (MRO) facility.

IFC’s role in this project is as follows:

- support a privately-owned and well-run airline;
assist Taca in maintaining and expanding its operations by providing a revolving credit facility to be used for pre-delivery payments for the purchase of Airbus A-320 family aircraft; and
- help support continued availability of safe, efficient and low cost air passenger transportation to the region.

IFC’s investment in the project would help establish the necessary financing from an international lending source in the form of a committed facility to help Taca finance certain aircraft pre-delivery payments and complete its expansion plans.

This is a Category B project. The following potential environment, health and safety impacts of the projects were analyzed.

- Flight operations safety and security;
- Maintenance-related hazardous materials, effluents, and waste management;
- Dangerous cargo handling;
- Aircraft noise and emissions control;
- Employee health and safety, including workplace exposure to chemicals; and
- Environmental, health and safety (EHS) management systems.

Taca operates in accordance with industry standards and has presented plans to continue to address these impacts to ensure that the proposed project will operate in a manner so as its activities comply with applicable host country laws and regulations and IFC environment and social requirements.
Location of environmental documents In locally affected community
Environmental documentation is available at the following locations:

- Taca International Airlines S.A.
- Edificio Caribe, Segundo Nivel
- San Salvador, El Salvador

In addition, the above documentation was also available at the following locations prior to consideration of the Project by IFC’s Board, from March 15, 2005 to April 21, 2005:

- On the Taca website homepage www.taca.com, under the News section.

- In the local newspaper La Prensa Grafica (www.laprensagrafica.com.sv).

In hard copy form, posted in the following Taca offices:
- Paseo General Escalón, Edificio Caribe, 2do. Nivel, Colonia Escalón, San Salvador
- Paseo General Escalón, Edificio Rialto, primer nivel, Colonia Escalón, San Salvador
- Paseo General Escalón, Edificio Montecristo, 1er, 2do. 3er. ó 4to. nivel, Colonia Escalón, San Salvador
- Paseo General Escalón, Torre Montecristo, 7mo ó 8vo. nivel, Colonia Escalón, San Salvador
- Aeromantenimiento, S.A.,Aeropuerto Internacional El Salvador,San Luis Talpa, Departamento La Paz,El Salvador

Contacts

For Inquiries About the Project, Contact

Mr. G. Ortega, Corporate Finance Director
Taca International Airlines, S.A.
Edificio Caribe, Segundo Nivel
San Salvador, El Salvador

Tel: (503)-247-3902

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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