The Project Sponsor is Continental AG, a worldwide automotive supplier of a broad range of electronic systems and components, tires and non-tire rubber products, founded and headquartered in Germany. Continental AG generated revenues of about €26 billion in 2010 and has approximately 164,000 employees across 45 countries globally. Continental AG indirectly holds 99% of the shares of the Continental Automotive (Thailand) Co., Ltd (the “Company”). In compliance with Thai law, which requires a minimum of three shareholders, the remaining 1% is held by three individuals, all employees of Continental Group.

The total project cost is estimated to be about €180 million, to be funded via €87 million in equity from the Sponsor, €13 million in intercompany loans, a €10 million working capital loan and the proposed IFC investment. The proposed IFC investment consists of a €35 million A loan for IFC’s own account and a €35 million B loan syndicated facility.

47.05 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	47.05
Equity

* These investment figures are indicative

The Project is located at the following address: 7/259, Moo 6, Amata City Industrial Estate, T. Mabyangporn, A. Pluakdaeng, Rayong, 21140, Thailand. The facility is strategically located 27 kilometers from Laem Chabang Deep Sea Port and 114 kilometers from Bangkok.

1. Climate change: The Project involves the manufacturing of high pressure pumps, a key component of the Piezo common rail system. Continental is a pioneer of diesel technology and is the market leader for Piezo Common Rail Technology, which will promote adherence to EURO 6 emission standards, which will be mandatory from 2014. This new technology will lower carbon dioxide emissions by over 15% relative to regional standards, and by 5% relative to world-class standards. Assuming that half of the CO2 savings are attributable to the injection system , the Industry Specialist calculates CO2 emissions reduction of 17 g/km per vehicle attributable to the use of the Piezo common rail technology. With an annual mileage of 30,000 km, a lifetime of 10 years per vehicle and a production of 145,030 vehicles in 2011, total estimated CO2 savings is 739,650 tons in 2011. 2. Technology transfer and enhancing Thailand's competitiveness: The Project will increase the competitiveness of the Thai automotive sector through the transfer of best practices and managerial and technological know-how. Innovation and high-tech manufacturing processes will support Thailand's transition to a developed country status. Historically, the development of the auto sector, including the export of high-value components, has played a significant role in the economic transformation, as exemplified by Japan, Korea and Taiwan. 3. Generation of highly skilled labor: The Project will generate approximately 780 jobs. Continental is committed to developing and strengthening its employees' technical expertise. All newly recruited engineers from Thailand attend a one year training program at its headquarters in Germany. 4. Support of local suppliers: This Project will require local suppliers to improve their quality and will generate around EUR40 million of local purchases annually by 2014. We estimate that over 1,000 employment opportunities could also be created within the local supply chain. Continental is situated close to its supply base and provides regular inputs to improve quality through internal audits and supplier evaluation.

1. Mobilization: IFC will mobilize 50% of the debt requirement for the Project, i.e. EUR35 million. 2. Provision of long-term Euro funding: IFC will provide Continental with long-term Euro funding which is currently difficult to obtain locally. 3. Risk mitigation: The Project company is the Sponsor's first manufacturing facility in Thailand and its first high-tech engine parts manufacturing outside of Europe. The Sponsor values IFC's presence as a proxy to a local partner in a country where the Group hasn't operated previously. IFC will also provide political comfort in the context of the recent social unrest in Thailand. 4. Global partnership: IFC is in a unique position to support the Group's expansion in Asia and assist with local knowledge in each of the emerging markets where Continental aims to expand its operations.

This is a Category B project according IFC’s Procedure for Environmental and Social Review of Projects.
Key E&S risks and issues related to project include: assessment and mitigation of the impacts of the Project; the Company’s capacity to manage its social, environmental, health and safety performance, and engage with local communities in accordance with local requirements and IFC Performance Standards and applicable guidelines; assurance of fair, safe and healthy working conditions; utilization of equipment and operational practices that maximizes conservation of energy, water and process materials including recycling and reuse initiatives; management of waste emissions and discharge; handling and management of hazardous materials and hazardous wastes; and the impacts of operations on local ambient environment.
 Further details on the potential environmental and social impacts of the project, corresponding mitigation measures and guidance on how and where information about the project are provided in the Environmental & Social Review Summary.