SPV was established in 1978 near Purwakarta, 120 kilometers east of Jakarta, and began commercial production in 1983.SPV is an internationally competitive producer of high-quality VSF. SPV is about 90.6% (directly and indirectly) owned by Lenzing, the second-largest viscose manufacturer in the world. SPV’s minority shareholders are P.T. Pura Golden Lion and an Indonesian individual.

The Project is expected to cost $192 million. IFC is considering an A loan of up to $30 million and a B loan of up to $110 million.

30.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	30.0
Equity

* These investment figures are indicative

The Project is being undertaken at the Company’s existing site in Purwakarta, Indonesia.

Sustainable development of the textiles industry: The Project supports the development of additional fiber capacities based on renewable raw material - dissolving grade wood pulp. Arguably, viscose has a lower impact on the environment compared with cotton (due to lower usage of land and water per unit of fiber) and petrochemical-based synthetic fibers (considering the bio-degradable properties of viscose and lower usage of fossil-based sources). Job creation: The Project is expected to create 270 new job opportunities for the local economy. In addition, the Project will support the long-term growth of the Indonesian textiles sector through increased domestic production of VSF at internationally competitive quality and costs. This, in turn, will ensure the retention and growth of employment across the textiles value chain in Indonesia, textiles being one of the country's key sectors in terms of employment and foreign exchange earnings.

Long-term funding and capital mobilization: Long-term funding with a sufficient construction phase grace period is difficult to obtain in Indonesia. While SPV is a competent industry player, its long-term financing needs for the Project cannot be met by local financiers. IFC's long-term loan lowers the financial risks of the Project by matching the repayment schedule of the loan with the cash generation profile of the Project. IFC will mobilize long-term funds from the international market under the B loan umbrella. Cleaner production: The Project includes cleaner production components. Without adequate long-term financing, it would be difficult for the Company to undertake this component which has a relatively long pay-back period. Supporting a long-term partner: SPV and IFC have had a banking relationship for over 20 years. IFC served as a dependable long-term partner of the Company, providing support in difficult as well as good times. SPV values this positive experience with IFC, and IFC's support will enable the Company to grow and remain internationally competitive.

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects. The proposed IFC investment will be used primarily to support SPV in financing the expansion of a fifth viscose production line and setting up of a wet gas sulphuric acid plant (WSA) for sulphur recovery and regeneration of sulphuric acid.
While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

PS 1: Social and Environmental Assessment and Management System
PS 2: Labor and Working Conditions
PS 3: Pollution Prevention and Abatement
PS 4: Community Health, Safety and Security

Environmental, social and health and safety issues identified during IFC''s review and any ameliorative measures are summarized in the Environmental and Social Review Summary (ESRS) and associated Environmental and Social Action Plan (ESAP) that SPV will implement as a part of IFC''s loan agreement. Upon successful implementation of the specific agreed mitigation measures, the proposed project is expected to comply with Indonesian laws and regulations, IFC Performance Standards and applicable sections of the corresponding guidelines.