26512 - Estre Ambiental

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Summary of Proposed Investment

Project Number

26512

Company Name

Estre Ambiental S/A.

Date SPI Disclosed

Feb 3, 2009

Country

Brazil

Industry

Infrastructure

Projected Board Date

Mar 5, 2009

Status

Completed

Sector

Waste Treatment and Management (Except Wastewater)

Department

Regional Industry INF LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Jun 10, 2009
Signed : Jun 19, 2009
Invested : Aug 31, 2009

Project Description

The project consists of financing Estre Ambiental S.A.’s (Estre or the Company) 2008-2010 investment plan (Investment Plan). The Investment Plan includes financing to support the company’s capital expenditure and growth strategy to:

- upgrade and expand Estre’s existing landfill facilities and associated landfill gas (LFG) collection and combustion systems,
- develop new sanitary landfills, including deployment of LFG collection and combustion systems,
- acquire and expand solid waste management related businesses,
- develop LFG-fired power generation projects in selected landfills, and
- enhance corporate management information system.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	24.43
Equity

Development Impact

Improve Urban Environmental and Social Quality.
Proper disposal of urban solid wastes is critical to maintaining and improving urban environmental and social (E&S) quality. This requires that adequate landfill capacity be available near urban areas. The Project supports the expansion of existing landfills and development of new landfills which will provide additional available capacity to dispose of urban municipal and industrial solid waste.

Mitigate Adverse Impacts from Non-Sanitary Disposal.
Only around 39% of the municipal solid waste collected in Brazil is disposed of in sanitary landfills. The rest is disposed of in open dumps or in landfills without adequate protection against adverse environmental and social impacts. Modern, sanitary landfills, such as the ones developed and managed by Estre, provide substantial environmental and social benefits compared to traditional solid waste destinations.

Contribute to GHG Reductions.
Estre expects the five existing landfills that it owns and operates in Brazil to generate 3.1 million CERs through the capture and flaring of landfill gas. The Company plans to install and operate LFG collection and flaring systems at all its new landfills, and where feasible, use the LFG to generate electricity.

Increase Renewable Energy Supply.
Estre’s Investment Plan includes the installation of a 9MW and 3MW LFG-fired power plant at two of its landfills. Besides supplying additional energy into the Brazilian grid and thus helping meet growing electricity demand, the two projects will generate power from a renewable source of energy. The LFG collected, if not used to generate electricity, would otherwise be flared.

Support the Growth of a Mid-Sized Company.
Estre has grown rapidly in recent years. IFC can play an important role by supporting the Company in its growth process through the placement of a prudent capital structure, by providing financing in a challenging credit market and by helping improve its corporate governance.

Promote Private Sector Participation.
By supporting Estre, IFC would provide positive market signal to demonstrate the viability and attractiveness of private sector engagement in the sector, especially in improving sector efficiency and mobilizing private sector capital into a sector that has traditionally been under-funded due to fiscal constraints.

Develop High E&S standards.
IFC’s participation as a lender to the company will require it to comply with IFC’s Performance Standards, thereby ensuring that Estre will continue to follow robust E&S management practices.

Stamp of Approval.
As Estre is still a medium-sized company, its management and shareholders see significant value in having IFC as a financial partner, which will further enhance the company’s credibility in its dealings with various counterparties, including other lenders, customers (including municipalities and industrial/commercial entities), suppliers and other industry participants.

Counter-Cyclical Role.
Given the on-going global financial turmoil and its negative impact on the Brazilian local financing market, Brazilian commercial banks remain very cautious about committing new loans. IFC can provide important additionality in this challenging credit market environment by supporting a company with good growth prospects and strong development impact.

Provide Longer-Term, Local Currency Debt Financing.
The company seeks to add longer-term, local currency debt to better align its capital structure with its growth plan. IFC will provide Estre with long-term local currency debt which is not available from local banks and the Brazilian capital markets for a company of Estre’s size, especially in the current financing environment.

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. Estre’s core business activities in landfill operations provide an essential environmental service to the public and that investments in electricity generation from biomass will provide additional environmental benefits. Estre is presently demonstrating the ability to effectively manage potential environmental and social risks from landfill and other business operations through the application of internationally accepted practices to protect soil, water and air resources.

Contacts

For Inquiries About the Project, Contact

Leonardo Santos
Chief Financial Officer
Estre Ambiental S.A.
Av. Presidente Juscelino Kubitschek, 1830
Torre IV - 4º andar - Itaim Bibi
04543-900 - São Paulo – SP
Tel: 55 (11) 3709-2300 / Fax 55- (11) 3078-3355
e-mail: leonardo.santos@estre.com.br

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Local Access of Project Documentation

Environmental documentation will be made available at the company’s headquarters. Company’s contact information is provided below.

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.

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