The Borrower will be Arkas Holding, which is wholly owned by Mr. Lucien Arkas, Chairman of the Group, and his three children. Arkas Holding is an umbrella entity overseeing the 38 privately held companies operating within the Arkas Group, most of which are based in Turkey. The Group has been active in Turkey since 1902, when Lucien Arkas’s grandfather founded an import/export business in Izmir, Turkey.

Arkas would use the IFC financing to fund part of its expected 2007-2008 capital expenditure program of approximately $365 million. The proposed investment consists of an A Loan (for the account of IFC) of $45 million.

45.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	45.0
Equity

* These investment figures are indicative

Arkas is headquartered in Izmir, Turkey, where the majority of its agency and shipping services is undertaken. The Group’s existing port, Marport, is located at the Ambarli complex, on the European shore just to the west of Istanbul. Autoport is located in the city of Golcuk, on the eastern end of the Sea of Marmara in the Gulf of Izmit, close to Turkey’s car manufacturing plants. Furthermore, Arkas has rail and truck depots located throughout the country.

Arkas’s success stems from its pioneering role in introducing containerization to Turkey, from its well managed port concessions and shipping operations, and from its excellent relationships and partnerships with big international shipping companies. As an innovative leader in its sector that has already made a major contribution to improving Turkey’s transportation and logistics, the Group fully merits IFC’s support.

Specifically, IFC’s loan will provide Arkas with the financial flexibility it needs to seize the various opportunities for expansion and efficiency improvements that are currently available to it. As a profitable, professionally managed group, Arkas is fully capable of taking advantage of these opportunities in order to help develop Turkey’s transportation sector on an efficient, sustainable basis. Turkey’s inadequate port sector is seen as a major bottleneck to economic growth. IFC’s loan will help support the development of an adequately sized, competitive and well run port sector in Turkey which in turn will:

- increase the overall competitiveness of Turkey’s transportation sector, thus reducing costs for consumers and producers;
- help provide exporters with better access to foreign markets, and importers with more timely delivery of production import; and
- facilitate increased trade with other developing countries in the region such as the CIS countries on the Black Sea and countries in North Africa, as well as with the EU.

The project will help Turkey realize its projected substantial increase in port traffic volumes, and the benefits will be shared amongst the Government (through receipt of higher royalties and taxes), project sponsors, inland road and rail transport companies, shipping companies, cargo owners, and final consumers. In addition, increased volumes will result in increased jobs at the terminals, road and rail companies. Since the IFC project involves a corporate loan to the Arkas Group which may be used to finance numerous possible project options, the calculation of a project ERR is not feasible.

IFC’s roles will include:

- the provision of long term financial support to Arkas for the development of the transport sector in Turkey;
- supporting the growth of a domestic company; and
- supporting Arkas in the implementation and application of best practice environmental and social management policies for its new and existing projects.

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 impacts may result that 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 environmental social information submitted by Arkas and field visits by IFC staff to selected port services operations, including the Marport terminal at the Ambarli port. Environmental, health and safety (EHS) issues associated with this prospective investment include:

- Environmental, health and safety management systems, including environmental assessment and licensing;
- Port and terminal pollution prevention and abatement;
- Port and terminal emergency preparedness and response, including handling and storage of dangerous cargoes;
- Vessel safety and pollution control; and
- Employee health and safety.
Location of environmental documents In locally affected community
Environmental documents in the local effected community will be available at the administrative offices of Arkas Holding S.A.:

Liman Caddesi Arkas Binasi No. 38
Alsancak 35230
Izmir, Turkey

Kasap Sokak Arkas Binasi No: 2/9
Esentepe 34394
Istanbul, Turkey