25900 - SLC Agricola S/A

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Summary of Proposed Investment

Project Number

25900

Company Name

SLC Agrícola S/A.

Date SPI Disclosed

Dec 12, 2007

Country

Brazil

Industry

Agribusiness and Forestry

Projected Board Date

Jan 14, 2008

Status

Completed

Sector

Natural Fibers (Cotton, Sisal, Jute, etc.)

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Jan 28, 2008
Signed : Mar 18, 2008
Invested : Jun 23, 2008

Project Description

SLC Agrícola S/A (the company or SLC Agricola) has an investment program to primarily expand its cotton production capacity:

- increasing the planted area by 52,000 ha by expanding its second harvest area (planting of two crops on a same plot within the same harvest year) and leasing areas adjacent to its current farms;
- adding a new farm already purchased in the Bahia state with a total 21,000 ha of planted area;
- adding two new areas in the Brazilian Savannah region to increase planted area by 42,000 ha; and - financing incremental working capital needs.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	40.0
Equity

Development Impact

IFC will support the Investment Program of a competitive Brazilian company. It will support the continued growth of SLC Agricola by helping the company in the expansion of its farms and the development of new farms in frontier poor regions of the country. Overall, the company’s total planted area will increase by 111.9% and supplied volumes by 165.7% by the end of the Investment Program.

Other Benefits:

Employment. By the end of 2006, before the Investment Program started, SLC directly employed 800 people full time plus an estimated 485 seasonal jobs. As the Investment Program develops, the Company will hire new employees across its farms, and is expected to employ a permanent staff of 1,100 people (additional 300 jobs), who receive a number of benefits such as full medical insurance, life insurance, housing and food provided at the farm and profit sharing program (SLC Agricola is the only farming company in Brazil as of today that offers profit sharing to its employees).

In many regions where the company operates, formal employment is extremely limited and SLC Agricola sets new standards in the region and creates income where it was previously limited.

IFC’s appraisal process and environmental and social standards are seen by the financial market as a step-up, which provides significant financial and reputational credibility value. The company has openly recognized these benefits during its successful IPO. Additionally, cotton is a highly cyclical commodity, and banks have historically been reluctant to provide long term financing. Since the banks see IFC’s partnership as a significant risk reduction, this relationship enables the company to access long term financing that is essential for such an extensive expansion plan. By helping to reduce the financing risk, IFC will continue to benefit the company.

- Regional economic development.

The investment program includes the purchase of farms in the frontier poor Northeast region. Development of the agricultural sector is key for the region’s development and access to financing in this region. The fulltime and seasonal employment generated by the company will have a positive economic impact in the region.

- Environmental and Social standards.

While the appraisal indicates the company handles Environmental & Social issues responsibly, IFC will add value to the company, and the sector, through the application of IFC''s Environmental & Social Standards. As the cotton sector expands in Brazil, the project will provide an opportunity for IFC to apply lessons learned elsewhere in the agribusiness sector to create a demonstration effect in the Brazilian cotton sector.

- Additionality.

Without IFC’s participation, the full expansion program would not be possible, the IPO would likely have been somewhat less successful, and long-term financing opportunities would be substantially reduced. Also, the company wouldn’t improve its environmental and social policies and upgrade them according to IFC’s Environmental and Social standards.

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 that can be avoided or mitigated by adhering to generally recognized performance standards, guidelines, or design criteria. IFC professional staff performed a physical evaluation of the project and environs, and reviewed relevant company and government documentation.

Contacts

For Inquiries About the Project, Contact

Laurence Beltrão Gomes
SLC Agrícola S/A

E-mail: Laurence.gomes@slcagricola.com.br

Telephone: 55 51 3230-7799

Environmental documents will be available at the following locations

Universidade Federal do Rio Grande do Sul
Faculdade de Agronomia – Prédio 41301
Av. Bento Gonçalves, 772
Porto Alegre-RS

Escola Municipal Angelo Padilha Hoffmann
Rodovia 436, Km 50
Cristalina-GO

Prefeitura Municipal de Costa Rica
Rua Ambrosina Paes Coelho, 228
Centro
Costa Rica-MS

Escola Municipal Padre Ângelo Delassalandra
Praça São José
Bairro Catumbi
Balsas-MA

Prefeitura Municipal de Sapezal
Rua do Cará, 990
Sapezal-MT

Escola Padre Fábio Bertagnolli
Vila Batavo
Balsas - MA

Escola Municipal Décio Furigo
Distrito de Deciolândia
Diamantino – MT

Casa Familiar Rural de Buriti
Rua da Bandeira, sem número
Bairro São Benedito
Buriti-MA

Prefeitura Municipal de Correntina
Rua das Chácaras, 445
Bairro Antonio de França Barbosa
Correntina-BA

The documents will also be available in the company’s headquarters and on the company’s website:

Rua Bernardo Pires, 128 – 5º andar – Bairro Santana
Porto Alegre – RS – Brazil

Website: www.slcagricola.com.br

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IFC Corporate Relations
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Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
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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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