Grupo Posadas S.A. de C.V.

completed

Summary Of Project Information (SPI)Project Name:MEXICO: Grupo Posadas VRegion:Latin America and CaribbeanSector:Project No:009404Projected Board Date:April 30, 1999Company Name:Grupo Posadas, S.A. de C.V.Technical Partner and/or Major Shareholders Posadas is publicly traded in the Mexican Stock Exchange and, through GDRs, in the US. The Company’s paid-in capital currently consists of 475,660,029 shares, of which 82% are ordinary voting shares. The remaining 18% are non-voting L-shares, the majority of which are traded as GDRs on the NASDAQ Portal System in the US. Control of Posadas is held by the Azcarraga family, which owns about 53% of the stock. Project Cost Including proposed IFC investment Total Project cost is estimated at US$185.6 million. IFC is considering a total new investment of US$80 million, including an "A" Loan of US$25 million, a "B" Loan of US$30 million, a "C" Loan of US$10 million and an equity investment of US$15 million. Location of project and Description of site The Project consists of: (i) the construction of five new hotels in Mexico, bringing in a total of 685 additional rooms; and (ii) the implementation of a debt retailoring program to replace the bridge financing incurred for the acquisition of the Caesar Park chain in South America. Out of the five new hotels, three will be managed under Fiesta Ameicana: Fiesta Americana Cabo del Sol located in the Baja Peninsula, the Explorean Costa Maya and the Explorean Kohunlich, both located in the Quintana Roo State. The other two hotels will be operated under Fiesta Inn: Fiesta Inn Ciudad Juarez located in a US border city, and Fiesta Inn Puebla la Noria, situated in Mexico'' mid center.Description of Company and Purpose of Project Posadas is the largest hotel operator in Mexico with respect to number of hotels, rooms and geographic coverage. The Company operated a total of 51 hotels representing 11,098 rooms at 31 destinations in Mexico, Brazil, Argentina and the US, serving a broad base of vacation and business travelers. The new hotel investment will enhance Posadas’ leadership by (i) increasing the number of its foreign currency earning coastal properties, (ii) expanding its presence in the underserved mid-sized urban city market, and (iii) allowing the Company to enter into a new market niche, the soft eco-tourism hotel concept developed in-house. The debt retailoring, on the other hand, will replace the Company’s bridge financing incurred for its acquisition of the Caesar Park chain in South America in 1998, reduce its financial costs, and improve its balance sheet. In addition, once the Company’s financial position is improved, Posadas will be able to proceed with its expansion in Brazil.Posadas, like many other small and medium size enterprises, is currently being affected by the dramatic contraction in the domestic and foreign credit resulting from the emerging market financial crisis. IFC''s involvement in the Project will have a wide demonstration effect within the international banking community by expressing renewed confidence in Mexico''s economic prospects and encouraging resumption of long-term lending to its small and medium size enterprises. Environmental Category and Issues This is a category B project according to IFC''s environmental and social review procedure. Environmental and social issues associated with this project include: sewage and liquid effluents, solid waste, water and power supply, and CFCs. Health and safety issues include fire protection, emergency response, employee training and public and employee health and life safety. Posadas is establishing a corporate Risk Management Department to consolidate and comprehensively manage fire prevention and life safety (FP/LS), environmental, health and safety (EH&S), and social development matters. EH&S aspects of Posadas’ properties have been found to be generally in compliance with governmental and World Bank guidelines. Posadas’ five new hotels, based on available information, are designed and equipped to meet applicable FP/LS and environmental requirements. IFC and Posadas have engaged a fire safety consultant who is conducting field appraisals of all of Posadas’ owned/leased/managed properties and developing a Corrective Action Plan for compliance with current World Bank/IFC fire safety guidelines.The is from the InfoShop.Host country location of environmental documentsOn Posadas'' website (www.posadas.com.mx) and on local newspaperDate SPI sent to InfoShop:March 30, 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).