The Project Sponsors are the owners of the Maldivian hospitality group, Universal. The ownership of Labriz is as follows: Universal Holdings Ltd. holds 70% of Labriz and is owned by the same shareholders as UEPL and in the same proportion. UEPL itself does not hold any equity interest in Labriz. UEPL is the flagship company of the Universal Group and was incorporated in 1978 in the Maldives by three brothers, M.U. Maniku, A.U. Maniku and I.U. Maniku who combined their existing tourism interests in four resorts into one entity. The very first resort in the Maldives was developed in 1972 by M.U. Maniku, and UEPL currently owns / has interests in seven resorts in the Maldives, making the Maniku family the first and one of the largest investors in the Maldives’ tourism industry. UEPL is privately held by the three founding members and four of their nephews. The remaining 30% of Labriz is owned by the Silhouette Island Lodge, which in turn is owned by two local investors. The Silhouette Island Lodge used to be a 22-room lodge on the island, owned and operated by the two investors.

The total Project cost was $57.5 million. The Project was financed by loans from UEPL (which took on short-term loans), Mauritius Commercial Bank and by internal accruals. The proposed IFC investment comprises a $20 million loan to Labriz, to be co-borrowed by UEPL, as the proceeds will be used to strengthen their balance sheets while repaying the short-term borrowings incurred by UEPL during Project’s construction.

20.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	20.0
Equity

* These investment figures are indicative

Silhouette Island is the third largest granitic island of the Seychelles. It lies approximately 20 kilometers northwest of Mahé with a land area of approximately 20km2 and a maximum altitude of approximately 750 meters. Silhouette Island is surrounded by a National Marine Park declared in October 1987. The Marine Park extends around the entirety of the Island to a distance of one kilometer from the low water mark. In addition much of the Island is soon to be declared as a National Park; however, the resort itself is located outside the National Park. The Resort is constructed on land that previously housed a 22-room hotel and land that was historically used for farming.

Facilitating the development of the tourism industry in the Seychelles: Because of the similarities in geography and infrastructural limitations between the Maldives and the Seychelles, Universal was one of two Maldivian hospitality companies approached by the Seychelles Ministry of Tourism to help develop the Seychelles' tourism industry, which was virtually non-existent before 2006. Despite having been present in the Seychelles for less than three years, Universal has contributed significantly to the local economy by providing employment opportunities, establishing a clinic and a school, by building required infrastructure (e.g. a jetty) and by providing free transport for the island's locals to Mahé, the capital. Environmental support: IFC's biodiversity and environmental specialists, together with external consultants, are working with Labriz to ensure that the resorts' operations have minimal impact on the biodiversity of the island and the resort's surrounding environment.

Long-term financing: Long-term financing is very difficult to obtain in the Maldives and the Seychelles. With IFC's loan, UEPL will be able to strengthen its balance sheet and extend the tenor of its loans, effectively reducing its reliance on short-term bank overdrafts, which were primarily used to finance its capital expenditures in the Seychelles. IFC's loan will also allow UEPL greater flexibility to invest in the development of new resorts in South Asia. Positive environmental impact: IFC is working closely with the Universal Group and Silhouette Resort's management to enable the resort to put in place systems and processes to: (a) demonstrate "no adverse measurable impact on the critical habitat on Silhouette Island"; (b) implement measures including biodiversity offsets such that resort operations have an overall positive/beneficial impact on the critical habitat; and (c) implement an additional program which is aligned with the conservation aims of the Marine Park.

The Project includes investments in significant scale resorts, one of which is located in and interacting with a critical habitat as defined by IFC’s Performance Standards 6, which is also a legally protected area. IFC determined that this is a Category A project according to IFC’s Procedure for Environmental and Social Review because there is potential for significant adverse impact that is diverse, irreversible and unprecedented upon this critical habitat and therefore upon the endangered and critically endangered species that are dependent upon this habitat. IFC made this categorization based on site visits, meetings with stakeholders and review of environmental and social documentation prepared for the Project.

In keeping with the national environmental regulations, an Environmental Impact Assessment (EIA) was commissioned prior to commencement of construction work on the Silhouette Labriz resort. The EIA was completed in 2005. Further, the Company commissioned and completed a third party Gap Analysis and Scoping study (“EHS Gap Audit”) to assess gaps with respect to IFC Performance Standards and develop an action plan to close the identified gaps.

Review of this project consisted of appraising technical, environmental and social information submitted by Universal’s Maldives operations and the Silhouette Labriz resort’s management including the EIA, EHS Gap Audit Report, HR Policies and other documentation. The appraisal team also visited a sample of Universal Resorts in Maldives and the Silhouette Labriz Island Resort. The review included interviews of corporate (operations and human resources) and resort managers at Maldives and interview of Silhouette Labriz management (operation and human resources), Island Development Company, Ministry of the Environment, conservation organizations such as the Island Conservation Society (ICS), Nature Protection Trust of Seychelles (NPTS), Marine Conservation Society of the Seychelles (MCSS), individuals from the on-site dive center and independent biodiversity specialists.

The Company is however committed to and has in place an action plan to: mitigate any adverse impacts; create biodiversity offsets as required; conduct its operations in a manner consistent with IFC Performance Standards as discussed below; and demonstrate at a minimum no measurable adverse impact on the critical habitat/environmentally sensitive areas.

A summary discussion on the social and environmental aspects of relevance to the Project including: (a) the EIA; (b) EHS Gap Audit; and (c) the company’s plans to address these impacts has been provided in the Environmental and Social Review Summary (ESRS) prepared by IFC.