28501 - Kronospan CEE-BG

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Summary of Proposed Investment

Project Number

28501

Company Name

KRONOSPAN BULGARIA EOOD

Date SPI Disclosed

Feb 23, 2010

Country

Bulgaria

Industry

Agribusiness and Forestry

Projected Board Date

Mar 26, 2010

Status

Completed

Sector

Wood Panels and Engineered Wood Products

Department

Regional Industry MAS LAC & EUR

Environmental Category

B - Limited

Previous Events

Approved : Jun 21, 2010
Signed : Jun 25, 2010
Invested : Sep 10, 2010

Project Description

Financed by IFC, Kronospan Bulgaria produces melamine-faced particleboard (“MFC”) and oriented strand board (“OSB”) at two facilities in Bourgas and Veliko Tarnovo. In the past three years, the company made investments of EUR50 million to upgrade particleboard production and environment equipment in Bourgas, establish a warehousing and distribution center in Sofia, and to acquire and rebuild a domestic particleboard company in Veliko Tarnovo. These investments were bridge-financed by shareholder’s funds and internal cash generation and Kronospan is now looking to partially refinance them with the help of IFC. This will allow Kronospan Bulgaria to position the company for growth when the economic situation improves.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	24.59
Equity

Development Impact

Climate Change Mitigation: Climate change benefits include a corporate commitment by Kronospan to produce panel products from waste-wood chips, forest residues and pulpwood, and to stimulate growth of forests through sustainable forest management practices. Employment: The Project will help the continued operation of the plants in Bulgaria and preserve the jobs of approx. 300 people. Benefits to Local SMEs: High volume production of value added products benefits the local furniture manufacturers and construction industry through lower prices and higher product quality. Demonstration Effect: The success of the project during the ongoing financial crisis is likely to have a demonstration effect for similar investments by other global and regional companies. This will encourage FDI, boosting confidence in the economy and the environment for private sector investment.

This project is a Category B project according to IFC’s environmental and social review procedure. Such category was assigned due to limited potential environmental and social adverse impacts, which can be duly minimized or eliminated. The key environmental and social issue associated with emissions, and the pollution prevention measures at this Kronospan plant follow the tight principles adhered to at all Kronospan facilities. These principles are established at a corporate level and are then implemented in all Kronospan facilities, either from the very start of production when new facilities are constructed or later through action plan upgrades when existing facilities are acquired.

Contacts

For Inquiries About the Project, Contact

Nikolay Bankov Tel: 00359.56805200 Email: office@kronospan.bg

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: 202-974-4384E Mail: Webmaster

Local Access of Project Documentation

At Kronospan Bulgaria EOOD’s offices at: 1) Severozapadna Promishlena Zona, 8000 Bourgas, Bulgaria, and 2) District Cholakovtzi, Promishlena Zona, Str. Dalga Laka, 5000 Veliko Tarnovo, Bulgaria.

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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