The Eren Group is a diversified industrial group with operations in the paper, energy, cement, textiles and retail sectors. It is owned by the Eren family through Eren Holding, which owns and manages portfolio investments in various Eren Group companies. Eren Holding’s consolidated revenues during 2004 were $470 million on total assets $543 million. Modern Karton, the flagship company of the Group, is currently the leader in the Turkish corrugated paper industry. Eren Holding has controlling shareholding of Modern Karton (93%).

The total project cost is estimated at $365 million. The IFC investment will consist of an A Loan of up to $40 million for its own account and a B Loan of up to $20 million.

40.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

* These investment figures are indicative

The project will be located in Corlu,Turkey on a 10 hectare-site adjacent to the existing manufacturing facilities.

- Development Impact:

The project will benefit Turkey by utilizing locally available wastepaper, competitive wages, economies of scale and modern technology to produce containerboard and corrugated materials at lower costs than imports. The strategic location relative to the wastepaper supply and market and its good reputation further support the expansion further strengthen the competitive advantages of the project. The project will also contribute to the modernization of the fragmented Turkish containerboard industry, which lacks economies of scale and is technically below international standards.

- IFC Role:

The project fits well with the Forest Products Sector strategy to target top tier domestic paper making companies with downstream processing, as the region faces massive shortage of fiber. The Eren Group has a dominant position in the wastepaper and packaging business in the fast-growing domestic market and a strong foothold into other neighboring countries in the Balkans and the Middle East. By providing long-term financing, IFC will support the growth of a Turkish industrial group that is emerging as a regional leader in the containerboard and corrugated packaging sectors. Alternative sources of long-term funding are still not available for Turkish companies, particularly in large volumes and tenors of more than two-three years. IFC will explore ways to provide technical assistance to enhance wastepaper collection.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social/community impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environment, health and safety, and social/community information submitted by the project sponsor. Plant visits have been made by IFC’s Environmental Specialist as a result of this new project and as part of IFC’s supervision of earlier investments. The following potential environment, health and safety (EHS), and social/community impacts of the projects were analyzed:

- Compliance of the expansion project and associated facilities as well as the existing facilities with Turkish and IFC environment, health and safety (EHS) requirements;
- Eren Holding’s continued commitment to quality and to performance to international standards including ISO and OHSAS certifications; and
- Social and community issues.
Location of environmental documents In locally affected community
The environmental documents translated in Turkish will be available at the gate of Modern Karton at the following address: Kirikgoz Mevkii Ulas Corlu, Turkey.