The sponsors are:

- Kibar Holding A.S.
- Mr. Asim Kibar
- Mr. Ali Kibar
- Mr. Ahmet Kibar

Kibar Holding A.S., founded in 1984 in Turkey, is the holding company of the family-owned Kibar Group.

The total project cost, including acquisition of Assan Aluminum, is estimated at $197 million, of which IFC has been requested to arrange up to $60 million, including a syndicated loan of up to $30 million.

30.0 million (USD)

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

* These investment figures are indicative

Assan Aluminum is located in Dilovasi-Gebze, in Marmara region of Turkey, approximately 40 kilometers from Istanbul.

The project gives IFC an opportunity to support an existing client that is striving to emerge as a stronger and more competitive player in the global setting. This project will help to build scale and make it a relevant player regionally and even internationally. Through modernization and introduction of state of the art technology and operating processes, Assan Aluminum will join Assan Demir and help Kibar to solidify the market position. Continuous thin-slab casting technology will reduce operating cost through energy saving.

The project will allow the company to improve technology to move up the value chain by producing higher quality and higher margin alloys. The proposed project will increase Assan Aluminum’s total production capacity to 109,000 tpa, doubling Kibar’s aluminum production capacity to about 240,000 tpa. Additional supply could be vital for the construction sector, especially housing construction, considering a housing gap in the country. Availability of high quality aluminum products for infrastructure development will also boost this core sector of the economy. The revitalization and expansion of Assan Aluminum will create and enhance the security of employment for over 500 people. Training and on the job experience will allow workers to strengthen their skills and improve their earning potential. Finally, IFC’s analysis and recommendations to improve Kibar’s corporate governance would help ensure quality decision-making, encourage effective succession planning and improve its access to the capital markets, all important for the long term sustainability of the group.

IFC will provide long term loan financing with maturities not easily available given the global credit crisis. Through a proposed B loan, IFC’s support is particularly important to help the company tap into international sources of funding. The long-term financing will provide stability to meet the company’s needs in an industry that is highly cyclical.

Kibar has expressed strong interest in working with IFC on this project as it values the relationship established through the previous transactions. Given the long term nature of their investment plans, the relatively large scale of borrowing, the cyclicality of the aluminum industry and the volatility of the Turkish economy, the sponsors have sought to continue the relationship with IFC. The sponsor is also seeking to benefit from IFC’s expertise in the industry.

Kibar’s overall corporate governance needs improvement, especially considering the Group’s intention to go public. In this respect, IFC will be looking to work with Kibar’s shareholders to develop a program to address the issues related to the IPO as well as overall corporate governance improvement.

This is a Category B Project according to IFC’s Procedure for Environmental and Social Review of Projects because, as a result of its due diligence, IFC has concluded that the potential adverse environmental and social impacts presented by the project are few in number, site-specific and have been or can be readily mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Key issues reviewed during appraisal include:

- environmental, health and safety management, air emissions treatment and quality;
- energy efficiency, wastewater treatment and disposal;
- materials storage and handling;
- solid and hazardous waste management and disposal;
- resource conservation;
- labor relations;
- occupational health and safety (including workplace quality and conditions, life and fire safety, and training);
- community health, safety and security.

While all Performance Standards (PS) are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment may have impacts that must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management Systems;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement; and
- PS4: Community Health, Safety and Security.