PROJECT

Projects

Summary of Proposed Investment

Project Number

9974

Company Name

PBG S/A

Date SPI Disclosed

Dec 21, 1999

Country

Brazil

Industry

Manufacturing

Status

Completed

Sector

Glazed Ceramic Tiles

Department

Gbl Ind, Manufact, Agribus & Services

Environmental Category

B - Limited

Previous Events

Approved : Mar 3, 2000
Signed : Apr 24, 2000
Invested : Jun 16, 2000

Project Description

Summary Of Project Information (SPI)

Project NameBrazil - Portobello II

RegionLatin America and Caribbean
Sector
Project No009974
Projected Board DateFebruary 15, 2000
Company NamePortobello S.A.
Technical Partner and/or Major Shareholders

The Gomes family indirectly controls 79.8% of the ordinary shares of Portobello S/A through Gomes ABPS Ltda., Portobello Empreendimentos Cerâmicos Ltda., and Portobello Participações Cerâmicas S/A. The major shareholders of Portobello S/A are Portobello Participações Cerâmicas S/A (62.7% of equity) and Portobello Empreendimentos Cerâmicos Ltda. (4.1% of equity). Other major shareholders are the International Finance Corporation (8.2%) and investment funds (20.5%).

Project Cost Including Proposed IFC Investment

The total project cost is estimated at US$40.5 million. IFC will assist Portobello by providing a financial package of up to US$16 million consisting of the following elements: (i) an A loan of up to US$9 million for IFC''s own account, (ii) a B loan of up to US$5 million to be syndicated for the account of participants, and (iii) a convertible C loan of up to US$7 million for IFC''s own account.

Location of Project and Description of Site

The main components of the project will be located in Tijucas, Santa Catarina, Brazil, where the existing production facilities are located. A small component will be located in Campinas, Sao Paulo, Brazil. The new site is close to the main highway from Sao Paulo city to Campinas. The site is currently relatively unutilized and the only development in the 80,000 m² site is a gas service station and a small restaurant.

Description of Company and Purpose of Project

Portobello S.A. is one of the leading Brazilian manufacturers of ceramic tiles. Its products include ceramic tiles for walls, floor and external cladding, and mortar and grout, all produced in its plant in Tijucas, State of Santa Catarina. The project consists of: (i) a new plant of porcelain tiles in Tijucas, Santa Catarina; (ii) a new mineral processing unit to prepare material for the new porcelain tile plant, (iii) a new mortar and grout plant in Sao Paulo, (iv) 86 new Portobello Shop franchised stores, and (v) additional working capital and restructuring of part of the company''s short term debt.
IFC''s role in this project is: (i) to provide long-tem financing, and (ii) to assist the company in dimensioning and structuring the project. IFC has worked with Portobello to define a project of limited scale enabling the company to reach its strategic objectives while maintaining a strong financial structure. To (iii) encourage good corporate governance and to help the company mobilize other sources of long-term funds.
The development impacts of the project include:
- Employment generation. It is estimated that the various facilities included in the investment plan will directly employ more than 110 people, and that another 630 jobs will be created in the Portobello Shop franchise retail chain.
- Technology transfer. The involvement of foreign partners in the project will result in transfers of advanced production technologies and involve extensive training of staff
- Support for entrepreneurs. The Portobello Shops financed through the project will be owned and managed by entrepreneurs trained and partly financed by the company. In addition, Portobello will expand the core curriculum of its School of Ceramics to train tile setting specialists, introducing a new profession certified formally in Brazil. Portobello will also provide its graduates with financing for their small business needs, and these professionals will be offered the opportunity to work as subcontractors of the Portobello Shop retail chain.
- Materials for downstream industry. The project will have a positive impact on the construction sector by increasing the availability of quality tiles and grout.

Environmental Category and Issues

This is an environment and social review category B project. Environmental, social and occupational health and safety issues include: economic and/or physical displacement resulting from land acquisition; air emissions; liquid effluents handling; treatment and discharge; solid waste handling and disposal; employee exposure to heat, noise, dust and chemical substances; and fire safety and emergency preparedness.
Portobello’s land acquisition for the facilities and the mines has been conducted on a “willing seller-willing buyer” basis. Currently, the sponsor has ten mining properties for the extraction of raw material. Portobello has established an environmental recovery program for the mines that have been closed. The extraction and transportation of the raw material is performed by third parties, which operate under the procedures and regulations of Portobello. The mines are located away from residential areas and resettlement of people has not occurred.
Portobello will install air emission system that will maintain particulate matter emission under 30 mg/Nm3. The sponsor will modify the matrix for all the energy sources throughout the facilities for the use of natural gas only. The elimination of coal and liquefied petroleum gas as sources of energy will eliminate the emission of sulfur and ashes.


The is from the Infoshop.

Host country location of environmental documentsIn Portobello''s administrative offices in Tijucas and in Portokoll''s administrative offices in Itupeva.

Date SPI sent to InfoShop December 21, 1999     
“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”

For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 974-4384
Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).

Sponsor / Cost / Location