Sisecam is the project sponsor. Sisecam owns controlling interests in 35 affiliate companies and subsidiaries, which comprise the Sisecam group. Sisecam was established in 1935 in Turkey by Turkiye Is Bankasi A.S. (Isbank), one of the largest private commercial banks in Turkey. Currently Isbank holds 69% of Sisecam’s share capital. Sisecam group companies are primarily engaged in the production of glass products and are organized into four business divisions producing flat glass, glassware, glass packaging and glass related chemicals.

Sisecam has been IFC’s client since the 1970s and is the largest glass producer in Turkey with a 90% market share. In 2005, Sisecam had a total sales turnover of $1.7 billion and a total glass production of 2.0 million metric tons. Soda Sanayii is engaged in the production of soda ash and other glass related chemicals. In 2005, Soda Sanayii’s total sales were $250 million with an EBITDA of $33 million.

The total project cost is estimated to be $65 million. IFC’s proposed investment is an A Loan in an amount of €24 million for IFC’s own account.

31.53 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	31.53
Equity

* These investment figures are indicative

SSL’s facilities are located in the town of Lukavac, which is in the Tuzla Canton of Bosnia and Herzegovina. Lukavac is about 140 km from the capital city Sarajevo and 14 km north of the Tuzla city. The project site is about 60 hectares and is also close to the port of Ploce in Croatia. The site has good road and rail connectivity to the entire region.

The transaction is expected to create a positive development impact based on the following factors:

- Promoting Privatization:

BiH has had a mixed track record on initiating and executing privatization of state enterprises. The successful sale and turnaround of SSL will help build more confidence in the government’s commitment towards privatization.

- Supply Chain Impact:

Multiplier impact based on growth in supporting industries (suppliers/consumers). SSL will be the largest consumer of limestone and brine mines in the region and its turnaround will help revive these companies as well.

- Current Account Impact:

Foreign exchange earnings based on exports.

- Employment Preservation:

There are 792 employees in SSL. A successful turnaround of the company will help preserve most of these existing jobs, as well as leave potential for future employment creation from expansion opportunities. In a country with a high official unemployment rate of more than 40% (informal estimates are closer to 55%) this will be a key development impact.

- Foreign Direct Investment:

With this investment, IFC will help BiH’s efforts to attract foreign investment capital.

IFC’s role in the Transaction is summarized below:

- Long Term Funding:

IFC’s investment will provide SSL with long term financing at commercial rates, the availability of which is limited for projects in BiH. Sisecam has not been able to interest Turkish banks for providing financing for this venture despite its strong balance sheet.

- Environmental and Social Support:

SSL’s facilities do not have a strong track record of environmental compliance. IFC is helping the Sponsor conduct a base line study and develop a corrective action plan to ensure that SSL conforms to adequate environmental, health, safety and social standards over a period of time.

- Support for Regional Expansion:

IFC’s investment will support Sisecam’s expansion into riskier countries in the region. Due to high energy costs in Turkey, Sisecam is looking towards other regional markets for capacity growth in its glass as well as chemicals business. SSL Bosnia is the Sponsors’ first soda ash venture outside Turkey without an international majority partner.

This project has been categorized as B following appraisal per the new IFC’s Environmental and Social Review Procedure (ESRP). Environmental, social, health and safety issues associated with this project include:

- Air emissions control, and effluent and waste management including monitoring;
- Plant site past contamination and associated facilities’ review;
- White and Black (Sea) Mud Storage;
- Housekeeping and Occupational health and safety issues;
- Corporate capacity in environmental management; and
- Sustainable community relations and initiatives.

Performance standards applicable for this investment may, therefore, include:

- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement; and
- PS4: Community Health, Safety and Security.

There is no land acquisition nor involuntary resettlement, and no impact on indigenous people or cultural property under the project, nor is it expected to have any impacts on natural habitats, forests, or protected or sensitive areas.

An Environmental, Social, Health and Safety (ESHS) Audit has been completed in January 2007. Based on the appraisal finding and the audit recommendations, it is anticipated that the proposed project will comply over time (4 to 5 years) with BiH laws and regulations and IFC requirements with the successful implementation of the recommended Action Plan activities.

Further details are provided in the Environmental and Social Review Summary available separately with this document as well as on IFC’s website.