Drobe Wool

completed

Summary Of Project Information (SPI)Project NameLithuania - Drobe WoolRegionEuropeSectorProject No009761Projected Board DateOctober 30, 1999Company NameDrobe WoolTechnical Partner and/or Major ShareholdersDrobe Wool is in the process of being privatized, with the Lithuanian government currently holding 68% ownership. A Post-Investment Shareholding structure, in which IFC is considering an equity and loan investment, is anticipated to consist of Drobe Management, composed of current and former employees; Alliance ScanEast Fund LP, a US-chartered private equity fund headquartered in Helsinki, Finland, focusing on direct investments in Central and Eastern Europe; and the European Bank for Reconstruction and Development (EBRD). The size of each stake is still to be determined.Project Cost Including proposed IFC investmentThe total estimated project cost is US$23.5 million of which IFC is considering an equity and loan investment of up to US$6 million in total.Location of project and Description of site The project company currently has four separate units: (i) a spinning and yarn twisting mill 6 km from Kaunas (25,000 spindles); (ii) a second spinning mill in Vieciunai, 120 km from Kaunas (17,000 spindles); (iii) a weaving mill in Silute, about 180 km from Kaunas (90 looms); and (iv) a weaving and finishing unit in Kaunas (230 looms). The consolidation will close the spinning mill 6 km from Kaunas and relocate all yarn production and dyeing operations to Vieciunai; the Silute weaving mill will be closed, and all weaving and finishing operations relocated to Kaunas.      Description of Company and Purpose of ProjectDrobe produces wool-based worsted woven fabrics for tailored suits and other menswear. It was founded in 1920 and with 2,300 employees it is the largest textile plant in Lithuania. Since 1991 Drobe has established a significant presence in EU woolen textiles markets (75% production for EU markets). The project is a US$23.5 million program to privatize, modernize, and consolidate Drobe''s spinning, weaving and finishing operations. The project will help to revitalize a major player in the Lithuanian textile industry and a significant exporter, and earner of hard currency, which has been successful in reorienting to EU markets. Environmental Category and Issues This is a category B project according to IFC''s environmental and social review procedure. Environmental and social issues include air emissions; water supply; liquid effluent treatment and disposal; land contamination from past operations; solid and hazardous waste disposal; labor retrenchment and retraining programs; environmental, health and safety compliance of subsidiary services; fire prevention and emergency response; and employee protection from noise, dust and hazardous substances. The sponsor will be required to commission an environmental, health and safety audit of the existing textile and heating/steam plant operations, including a Corrective Action Plan to minimize potential impacts and to ensure the project will comply with relevant government and World Bank requirements.     The is expected to be available on or about August 28, 1999 from the InfoShop.Host country location of environmental documentsDROBE WOOLJonavos 60 3000 KaunasLithuaniaDate SPI sent to InfoShop August 4, 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) 473-7711facsimile: (202) 974-4384Environmental 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).