The Eren Group is a diversified industrial group with operations in the paper, energy, cement, textiles and retail sectors. It is owned by the Eren family through Eren Holding, which owns and manages portfolio investments in various Eren Group companies. Eren Holding’s consolidated revenues during 2007 were over $690 million on total assets of over $1,300 million. Modern Karton, the flagship company of the Group, is currently the leader in the Turkish corrugated paper industry. Eren Holding has controlling shareholding of Modern Karton (93%).

The IFC investment will consist of an A Loan of up to $20 million and a C Loan of up to $20 million to meet the refinancing and working capital needs of Modern Karton over the next 3 years.

40.0 million (USD)

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

* These investment figures are indicative

The company’s manufacturing facilities are located in Corlu, Turkey.

The proposed project will have the following key development impact:

Ensuring the sustainability of a domestic company and maintaining local employment: The project will help the leading Turkish producer survive the current economic downturn, which will in turn sustain employment of the workforce at Modern Karton and its corrugated boxing and waste paper collection subsidiaries. The company will continue to be a source of revenues to the Turkish government and contribute to Turkey’s economic performance going forward.

Increased local supply chain: MK’s recent expansion benefits from a significant natural advantage of utilizing domestic wastepaper to produce corrugated paper (over 90% of this input is currently locally sourced). IFC’s investment in MK will help ensure that local waster paper will continue to be sourced, thereby creating additional business and job opportunities to those at the bottom of the pyramid who are involved in waste paper collection.

Positive climate change impact: Recycling and waste paper collection in the country are expected to increase as the new project comes on stream, with an associated climate change benefit for the country.

IFC’s presence will ensure that the company’s operations comply with the best-practice environmental and social standards. IFC will seek to improve MK’s current environmental management systems in line with best international practices, especially in improving and bringing up to standard the existing waste water treatment facilities.

Since the beginning of the crisis, interest rates in Turkey have increased significantly and credit has become scarce. By funding the project, IFC will be providing scarce medium term working capital financing to a long term client, thereby allowing the company to preserve their financial flexibility as their new capacities have come on stream at a difficult time. IFC will also be providing support to an existing client with good fundamental business prospects and export capacity, and will help alleviate the adverse effects of the current global liquidity crisis.

The key environmental, social and occupational health & safety and community aspects and issues associated with this investment include:

- health, safety, environmental and social management systems and performance tracking at the existing manufacturing operations and technical facilities;
- occupational health and safety;
- human resources policy and procedures particularly in terms of freedom of association, grievance mechanisms and management of retrenchment;
- control of supply chain operations;
- hazardous materials management;
- management of air emissions, process effluents and wastes;
- hazardous materials management;
- water and energy conservation.

The adverse environmental and social impacts are limited and the sponsor has presented readily available mitigation measures and an action plan for further development. Therefore, this is a Category B project.

More information about mitigation measures is made publicly available within the Environmental and Social Review Summary document and the relevant action plan.