The project sponsor is Mr. Goran Strok. Mr. Strok established GS Hotels and Resorts in 1995 and is currently the sole owner of ALH. Each hotel is a separate company and is majority-owned (directly or indirectly, through ALH) by Mr. Strok, in his individual capacity.

The total project cost is estimated at approximately €330 million. The proposed IFC investment is a €27.5 million ‘A’ loan for IFC’s own account and an equity investment of €12.0 million.

51.04 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	35.53
Equity	15.50

* These investment figures are indicative

ALH owns and operates five hotels on the Adriatic coast. One of the hotels is located in the northern part of the Adriatic coast (in the city of Rijeka) and the other four in the southern part, close to the old city of Dubrovnik. Dubrovnik is the main port and tourist center of the southern Croatian coast. It is one of the famous historical cities of Europe and the jewel in Croatia’s tourism crown, with its unique old city, designated as a world cultural heritage site and under UNESCO protection. Dubrovnik has a population of approximately 50,000 and an economy based on tourism and seafaring.

The project will help to re-build the damaged tourism infrastructure, restore tourism numbers and help re-establish tourism as an important source of foreign exchange for Croatia. The business model fits very well with the government strategy with a focus on rebuilding existing assets damaged by the war. The project will benefit from good locations with views of the Adriatic Sea and close proximity to Old Town Dubrovnik. The project will also establish strong direct and indirect linkages to local and regional economies both in the development phase (construction services, building supplies) and during on-going operations (F&B and other operating supplies).

IFC’s equity and loan investment is a part of the comprehensive financial package aimed at helping the company rebuild hotel infrastructure and upgrade the quality of rooms being offered in Croatia and also helping a local company to significantly improve its financial situation by injecting much needed equity and refinancing its existing debt. IFC’s equity and loan investment in the company will also help encourage the company’s biggest lender to reschedule its loan to the company on terms similar to those offered by IFC.

Overall, by its investment, IFC expects to introduce the best corporate governance practices and help this owner controlled company position transform and apply its experience to neighboring countries.

This project is reviewed as a Direct Investment according to IFC’s Environmental and Social Review Procedure, and the following Performance Standards (PS) are found to be relevant:

- PS1: Social and Environmental Assessment and Management Systems with respect to the company’s management of its environmental, health and safety performance in the construction and operation of hotels, and maintaining compliance with national and local permitting requirements.
- PS2: Labor and Working Conditions with regard to fair and safe working conditions and ethnic equality.
- PS3: Pollution Prevention and Abatement with regard to sustainable water supply and usage, wastewater treatment and discharge, solid waste sorting and disposal, and air emissions from building heating and cooling.
- PS4: Community Health, Safety and Security in respect of life and fire safety.
- PS8: Cultural Heritage as some of the hotels and properties are located in historic and culturally important sites.

The appropriateness of a B categorization has been confirmed during visits to all ALH’s existing hotels in Croatia.