The Unitim Group is a privately owned, Turkish company. The Group began its operations in 1985 as the Imteks Textile Manufacturer and began distributing the Tommy Hilfiger brand in Turkey in 1998. Since then, Unitim has added more brands to its portfolio and evolved into a leading Turkish apparel retailer. Currently, the Group manufactures garments for export for Adidas, Nike, Puma, and Tommy Hilfiger (among others) and distributes 12 different brands, including Tommy Hilfiger through 134 sales points in seven countries. The company’s expansion plan is occurring in parallel with a corporate reorganization through which the company aims to streamline its operations and improve corporate governance and transparency. Burchan Cemiloglu (sponsor) is the founder and the majority owner (99%) of the Unitim Group.

The total project cost is estimated at $90 million. IFC’s proposed investment will consist of $20 million of senior, secured debt through an A Loan and $10 million of unsecured debt through a C loan. There is no convertibility feature on the C Loan. Upon activation, both the senior debt and the C Loan will carry a tenor of 8 years. The A Loan will have a grace period of up to 2 years and the C Loan will have a grace period of up to 5 years. The company plans to meet the remainder of its funding requirements through internal cash generation and debt from other commercial banks.

30.0 million (USD)

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

* These investment figures are indicative

The stores opened during the retail expansion will be primarily located in the urban and prime shopping areas of Istanbul and Ankara. The textile manufacturing plant will be located in a Qualified Industrial Zone (QIZ) in Egypt. The location for the Egyptian plant will be finalized during the Project.

The project will transfer new manufacturing technologies and management and production techniques to Egypt during the course of the manufacturing expansion. Unitim’s garment production unit has pioneered the application of the auto industry’s lean production technique to the textile industry in Turkey and the expansion will allow the company to export this technology to Egypt. This knowledge transfer will not only add to the modernization of the manufacturing industry but also lead to the increased skill development of Egyptian managers and workers.

A diverse and modern retail sector attracts commercial investment by creating dynamic commercial centers. The retail expansion will raise the standard of the retail experience in Turkey, provide local consumers with greater choice of higher quality goods and increase competition in the retailing sector by setting new international standards for service. The expanded franchise network will give local entrepreneurs the opportunity to further develop and grow their own businesses within the framework of a larger corporate structure, introduce franchise partners to innovative marketing and brand management techniques, and allow them to participate in the overall profitability of the brands.

IFC''s additionality and role is to support local entrepreneurs in local markets who are growing and expanding their businesses. In addition to this general role, IFC will also play several other roles in the transaction.

- The transaction will also provide competitive long term financing that is currently unavailable to the company
- Provide critical financial assistance and operational guidance as the company seeks to restructure its balance sheet, improve its profitability and refine its corporate structure.
- IFC’s Environmental Department will ensure that the project’s health, fire, safety and employee labour standards meet international best practice guidelines.

Finally the partnership will demonstrate to the market the viability of financing strong, local players in their regional expansion 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 and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Environmental, social , health and safety issues associated with this project include:

- Air emissions and effluent disposal;
- Site material storage and handling;
- Solid and hazardous waste management and disposal;
- Housekeeping and Occupational health and safety;
- Corporate capacity in environmental management;
- Sustainable community relations and intiatives and
- Labor and working conditions.

Performance Standards applicable to all plants are:

- PS1: Social and Environmental Assessment and Management;
- PS 2: Labor and Working Conditions;
- PS 3: Pollution Prevention and Abatement; and
- PS 4: Community Health, Safety and Security.

For the existing facilities and in regard to PS5, all plant sites are located either in industrial areas, in semi rural well established agricultural areas or close to urban areas. No people were displaced or lost economic livelihoods when the plants were established. All lands are clearly modified habitats, with no known critical habitats present. No indigenous peoples are known to be present, and no cultural heritage sites have been identified close to any of the plants.

The relevant PSs have been provided to and discussed with the client as have the relevant IFC Guidelines (i.e. Environmental, Health and Safety (EHS) guidelines: General EHS guidelines, draft August 2006; Environmental Health and Safety guidelines for Textile manufacturing; draft August 2006 ).