27322 - Cencosud Arg

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Summary of Proposed Investment

Project Number

27322

Company Name

CENCOSUD S.A.

Date SPI Disclosed

Jul 3, 2008

Country

Argentina

Industry

Tourism, Retail and Property

Projected Board Date

Aug 4, 2008

Status

Completed

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Sep 8, 2008
Signed : Sep 24, 2008
Invested : Oct 15, 2008

Project Description

Cencosud S.A. Argentina (Cencosud Argentina or the company) is one of the leading retailers in Argentina, operating in the modern sector of the country. It was the pioneer of the home improvement retail segment in Argentina, establishing the first store in 1993. The proposed project entails providing a corporate loan to the company to finance its capital expenditure program for the expansion of its retail business in Argentina and the re-financing of a portion of its existing short-term debt. IFC will provide an A Loan of up to $50 million and mobilizing a B Loan of up to $110 million.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	50.0
Equity

Development Impact

The proposed project is expected to have the following key development impacts:

- the provision of a wide range of good quality home improvement and building material products at an affordable price due to increased competition;
- the upgrade of business practices in the Argentine retail business by improving quality and standardization;
- the promotion of local supplier linkages, thus developing the local private sector; and
- the increase in direct and indirect employment.

The ongoing global financial crisis and increased volatility has severely reduced access to long term financing for Argentine risk, and the global financial markets remain virtually closed for companies seeking to finance long term investment plans. The IFC role in the project includes:

Long-term Financing:

The proposed financing will allow Cencosud Argentina to access long-term financing under the current challenging market conditions and remain competitive vis-à-vis multinational retail companies. By participating in the proposed Project, IFC would play a countercyclical role allowing Cencosud Argentina to access long-term capital under ongoing deteriorated financial market conditions.

Resource Mobilization:

IFC is expected to mobilize additional financing through B-Loan syndication, attracting commercial bank financing with longer tenors currently unavailable to the Company in Argentina. The B Loan program will provide comfort to commercial banks, and will encourage their decision to provide longer-term financing to Cencosud Argentina.

South-South Expansion.

IFC would further support the internationalization of Cencosud’s operations, supporting the increased investments of a Chilean corporate in Argentina.

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. The following environmental, social and health and safety issues associated with this project were analyzed:

- Social and environmental management system
- Labour conditions, OHS, and worker grievance mechanism
-Pollution prevention, abatement, and energy effiency
-Community engagement, emergency preparedness response, and infrastructure safety
-Quality and sustainability of water resources
-Conservation of historical building.

Contacts

For Inquiries About the Project, Contact

Mr. Martin Schulz,
Chief Financial Officer
Cencosud S.A.
Parana 3617 Edificio 500 (B1640FRD)
Martinez, Buenos Aires, Argentina

Tel: (54) 11- 4733-1474
Fax: (54) 11- 4733-1433

Mr. Matias Videla Sola
Controlling Director
Cencosud S.A.
Parana 3617 Edificio 500 (B1640FRD)
Martinez, Buenos Aires, Argentina

Tel: (54) 11- 4733-1429
Fax: (54) 11- 4733-1402

http://www.cencosud.com.ar

For Inquiries and Comments About IFC, Contact

General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster

Local Access of Project Documentation

Environmental documentation will be made available at the following location:

Edificio 500 – Parana 3617 –
Buenos Aires, Argentina

http://www.cencosud.com.ar

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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