With 60 years of tradition, Gorenje is the largest home appliance manufacturer in Southeast Europe and exports 90% of its sales to 70 countries with a focus on Europe, from that more than half to Eastern European markets, where Gorenje brand has been highly recognized. In 2009 Vienna Brand institute valued Gorenje brand at 458 mio EUR, 85% of its sales are under its own brand names. Gorenje business activities are organized within three operating divisions: (i) Household Appliances Division (78% of sales) - this division manufactures and distributes refrigerators and deep freezers, cookers, washing machines and dryers; (ii) Home Interior Division (4% of sales) - this division manufactures and markets kitchen and bathroom furnishings, bathroom fittings and ceramic tiles; and (iii) Ecology, Energy and Services (18% of sales) - this division engages in energy trading, ecology and environment protection, trade, engineering, and catering services. Gorenje produces over 2.9 million units large home appliances of its own production in its three factories in Slovenia, Serbia and Czech Republic. Gorenje has been publicly-listed on the Ljubljana Stock Exchange since November 2000. The Group has about 21,000 shareholders. The ownership is divided as follows: (i) Slovenian state-owned pension fund , KAD (25.19%); (ii) Home Products Europe B.V (7.63%), a share swap with a strategic investor at acquisition of leading Dutch home appliance company; (iii) INGOR d.o.o.&Co.k.d.(5.66%) - management; KD Galileo (4%) – investment funds; (iv) treasury stock (0.86%), and other small shareholders consisting of banks, investors and individuals (51.98%)

IFC is planning on investing up to EUR 30 million in equity in Gorenje and providing EUR50 million Senior A-Loan form IFC’s own account and raising up to EUR 100 million in syndication under IFC’s B-Loan umbrella.

92.19 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	61.46
Equity	30.73

* These investment figures are indicative

Gorenje’s main facilities are located in Velenje, Slovenia, Valjevo and Stara Pazova in Serbia and Mora Moravia in the Czech Republic. All of these sites are located near small towns and are the largest generators for employment in the region.

The IFC investment will help Gorenje continue its longstanding leadership, by helping it expand, modernize, and restructure its operations following the economic crisis. The investment will result in better product competitiveness through improved energy efficiency and innovation, enhanced high end product range, improved labor productivity and job creation in South-East region. The Group’s investment program will allow the transfer of first-class production methods and manufacturing practices including the development of local industry through linkages with network of local suppliers. The capital increase associated with the Project will reduce the government's influence and strengthen market-oriented behaviors. Moreover, the IFC investment will support the Group’s growing focus on ecology and offer comprehensive waste management solution to regional clients.

The proposed IFC investment in equity and senior debt will support the Group in achieving its strategic goals: (a) expand, modernize, develop, restructure to maintain its competitiveness and reposition its brand name; (b) restructure the balance sheet by prolonging the maturities of its debt; and (c) investments in the ecology division. Gorenje needs to extend the maturities of its debt in order to smooth out its repayment schedule in the coming years. However, long-term financing is not readily available on the market at the moment and IFC can help with the extension of a 5+ year loan. IFC is planning to mobilize up to EUR 100 million in additional money through its B loan program. IFC will provide technical advice to help improve the Company’s operational efficiency and will also look into the opportunities to assist the company in expanding its energy efficiency/renewable energy efforts. IFC’s participation as an equity partner is expected to broaden the prospective investor pool, whilst reducing Government involvement.

This is a Category B project according to IFC’s Policy on Social and Environmental Sustainability.
The Project is being developed in accordance with Slovenian and Serbian regulatory requirements. Retrenchment will be managed according to Slovenian law and IFC PS2. Issues of potential concern include management of routine EHS issues i.e. effluents, solid waste and hazardous material management, working conditions and approach to community engagement and disclosure of information. The Company is committed to good environmental & social management, following international labor standards, and avoiding any significant pollution. While Gorenje’s Slovenian operation has the appropriate certified EHS management systems in place (ISO 17025, 14000, EMAS, OHSAS 18001), its Valjevo plant has developed informal EHS managements system based on policies and procedures of the certified system in the Slovenian operations. Gorenje management is committed to further develop existing EHS systems in Valjevo and to obtain formal certifications for ISO14001 and OHSAS 18001.