Fras-le S.A.

completed

Summary Of Project Information (SPI)Project NameBrazil: Fras-LeRegionLatin America and the CaribbeanSectorProject No008767Projected Board DateMay 2, 1998Company NameFras-le S.A. Technical Partner and/or Major Shareholders Fras-le S.A. (“Fras-le”, the “Company”) is owned by Randon Participacoes S.A (“RP”, the “Randon Group”), together with a group of Brazilian institutional investors (Previ, Petros and BNDES). RP owns 50.2% of Fras-le’s voting common shares, Previ owns 35% and Petros owns 13%. RP is listed on the Sao Paulo stock exchange and its shares are widely held and traded. However, it is controlled by the Randon Family who, through their holding company Dramd Participacoes e Administracao Ltda., own 77% of RP’s voting common shares and 0.5% of RP’s non-voting preferred shares (together, these holdings amount to 27% of RP’s total outstanding shares).Project Cost Including Proposed IFC Investment Total project cost is estimated at US$ 83 million. IFC is considering a total investment of US$30 million including an "A " Loan of US$10 million and an equity investment of US$5 million, both for its own account, and a "B" Loan of up to US$15 million, for the account of participating banks.Location of Project and Description of Site The project will be implemented in Fras-le’s existing facilities in and around Caxias do Sul in the state of Rio Grande do Sul.Description of Company and Purpose of Project Fras-le is a Brazilian manufacturer of friction materials with estimated 1997 sales of US$119 million. The company’s main products are brake pads, brake linings, blocks, and clutch facings. The project involves a US$83 million investment for (i) relocation of an old and inefficient plant; (ii) environmental facilities to treat solid residuals and to control gases; (iii) debottlenecking of production facilities and technology upgrade; and (iv) financial restructuring to reduce the Company’s heavy debt burden. These changes will enable Fras-le to expand production capacity of brake pads by 50%, blocks by 33%, and brake linings by 40%. In addition to providing equity and long-term financing which is not easily available to Fras-le from other sources, IFC will endeavor to introduce the Company to the international syndicated loan market through the proposed B Loan. IFC will also advise the Company on corporate governance issues and environmental management. The benefits of the project should include: (i) the creation of a stronger Brazilian company, better able to withstand competition from abroad; (ii) generation of new jobs as the Company expands its operations; (iii) the relocation of a manufacturing facility from the center of the city to an external location; and (iv) increased focus on environmental issues.Environmental Category and Issues Category B. Environmental, occupational health and safety issues associated with this project include: air emissions,liquid effluents, solid and harzardous waste disposal, fire prevention and emergency response, contaminated land from present or past operations, and worker exposure to harzardous materials, fumes, noise, and dust. The air emissions at the Fras-Le plants in and around Caxias do Sul and in San Martín, Argentina satisfy local regulations and World Bank guidelines. Forqueta is the only plant which produces industrial effluents, which are treated in compliance with local regulations. Fras-Le has committed to improve the effluent of the treatment plant in order to comply with World Bank guidelines by the end of September 1998. Fras-Le manages chrysolite asbestos materials and wastes according to local requirements and in line with international standards. The company is phasing-out gradually the use of asbestos in the manufacture of friction material for breaks and clutches. Fras-Le manages other hazardous materials according to internationally accepted standards, and has adequate fire prevention equipment and procedures for emergency response. The company provides training for all employees on environmental issues, occupational health and safety, first aid and fire safety. Significant adverse impacts on the environment and worker health and safety are not expected from this project. The is from the Public Information Center.Date SPI sent to InfoShop April 2, 1998“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).