25668 - Concern Khlibprom

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Summary of Proposed Investment

Project Number

25668

Company Name

Kontsern Khlibprom, Publichne AT

Date SPI Disclosed

Mar 14, 2007

Country

Ukraine

Industry

Agribusiness and Forestry

Projected Board Date

Apr 20, 2007

Status

Completed

Sector

Grain Processing (Milling, Starch, Flour, Malt)

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : May 21, 2007
Signed : May 22, 2007
Invested : Aug 27, 2007

Project Description

Open Joint Stock Company Khlibprom (Khlibprom or the company) is one of the leading manufacturers of bread and bakery products in Ukraine. It owns and operates three flour mills, fourteen bread making plants and eighty one retail stores in Western and Central Ukraine. The proposed project is a corporate-wide expansion aimed at expanding production capacities, improving efficiencies and strengthening Khlibprom’s balance sheet. It involves:

- acquisition of additional bread making capacity;
- modernization of existing bakeries and upgrade of retail network;
- construction of a new flour mill and associated grain storage facilities; and
- refinancing short-term debt.

Sponsor / Cost / Location

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

Development Impact

The company has a permanent staff of 4,600. Its development is expected to create additional employment of over 2,500 additional direct jobs by completion in 2010. Approximately 2,000 positions will be in the bakeries and 500 in the flour mills and retail shops.

The project will contribute to the development of the grain sector in Eastern and Western Ukraine by increasing demand for local wheat purchased from private farmers. The number of farmers supplying the company is expected to double, reaching 37 by 2010.

The company relies on a large number of small and medium enterprises (SMEs). Currently, there are about 130 SMEs that transport raw materials, distribute and sell finished products. As the company expands its throughput, the number of SMEs that benefit from the company’s activity is expected to increase by 200 by 2010.

This is a category B project according to IFC''s environmental and social review procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization will shortly be publicly available in the Environmental and Social Review Summary (ESRS) disclosed on IFC’s website (http://www.ifc.org/projects). The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that the client will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards.

Contacts

For Inquiries About the Project, Contact

Ulyana Dovbush, Senior Investment Specialist
Universal Investment Group
72 Turhenyev Street
Lviv, 79015, Ukraine
Telephone: 38 (032) 298 8915
Fax: 38 (032)298 8902
E-mail: udovbush@uigroup.com.ua

The electronic versions of the ESRS and the ESAP will be available for public review on IFC’s website. The public can also view the ESRS and the ESAP in Ukrainian language on the Khlibprom website: www.hlibprom.com.ua.

The hard copies will be made available at the following locations:

2, Khlebnaya Str., City of Lviv.
1, Artyoma Str., City of Vinnitsa
48, Vozrozhdeniya Str., City of Gaysyn

For inquiries and comments about the project, please contact:

Mr. Valentin Melnichenko
2, Khlebnnaya str, Lviv, mail box 79035
E-mail: info@hlibprom.com.ua

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. It is not an offer of shares to the public and is intended solely to enhance the transparency of IFC’s activities. 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 Policy on Disclosure of Information that went into effect April 30, 2006.

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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