Hotel Armenia

completed

Summary Of Project Information (SPI)Project Name:Armenia: Hotel ArmeniaRegion:Europe IISector:Hotel and TourismProject No:009337Projected Board Date:July 16, 1999Company Name:Hotel ArmeniaSponsor and Technical PartnerThe Hotel Armenia project is a US$36.5 million project sponsored by AK Development (“AK”), a business development company founded by several Armenian-American investors (the “Sponsors”). AK has already purchased an 80% stake in Hotel Armenia from the Armenian Government through a privatization tender managed by Merrill Lynch. The remaining 20% of the Company is still owned by the Government.Hotel Armenia (the “Company”) will be managed and partially financed by Marriott International, Inc., one of the world’s leading hospitality companies with over 1,800 operating units in the US and 53 other countries. In 1998, Marriott reported net income of US$390 million. Marriott owns several other well-known brands including Ritz-Carlton Hotels, Renaissance hotels, Ramada International and Courtyard by Marriott. Marriott already has a significant presence in Central and Eastern Europe, including hotels in Moscow, Warsaw, Prague and Budapest. Project Cost Including proposed IFC investment Total Project Cost is estimated at US$36.5 million. The Sponsors have requested IFC invest up to US$4 million for up to a 25% equity interest in the Hotel Armenia. Location of project and Description of site The buildings that will house the renovated hotel are located in central Yerevan, Armenia on Republic Square, next to a city business center and government buildings. Description of Company and Purpose of ProjectHotel Armenia is currently the primary hotel in Yerevan. The project Sponsors plan to renovate the hotel to create a 223 room western-standard facility managed by Marriott. Hotel Armenia will be the first international-standard hotel in the Country. The viability of a 223-room business hotel in Yerevan is warranted by increased air traffic and business opportunities in Armenia. The prime location of the hotel will give it an advantage over potential competitors. The Project will substantially benefit from Marriott''s operating experience and its commitment to the project. The Hotel Armenia project will constitute IFC’s first investment in Armenia. The project will facilitate international business development in Armenia by providing business travelers with international-standard accommodations. IFC’s involvement in the project is central to raising needed equity and debt financing, insuring a proper structuring of the transaction and assuring the Armenian Government of the benefits of and backing for the project. IFC’s involvement in a project in Armenia will have a significant demonstration effect, and therefore assist Armenia’s efforts to facilitate other foreign direct investments in the country. Finally, IFC will play an important role in facilitating the government’s privatization program by investing in one of the first large privatized companies in Armenia.Environmental Category and IssuesThis is a category B project according to IFC''s environmental and social review procedure. Environmental issues associated with this project include sewage and liquid effluents, solid waste, asbestos and PCB removal, water and power supply, and CFCs. Health and safety issues include fire protection, employee safety training and emergency response. The sponsor will dispose of all liquid effluent and sewage through the municipal treatment plant who have confirmed they have the capacity to treat effluent to meet local standards. Water and power will also be supplied by the local grid. Potable water will be treated on site to meet WHO standards. The sponsor has committed to provide IFC with an asbestos and PCB removal and disposal plan, for IFC''s clearance, prior to implementation of these respective plans. Solid waste will be disposed of at the municipal landfill. An independent fire safety audit of the hotel has been completed and all recommendations in this audit will be implemented by the sponsor. With respect to employee safety the sponsor will follow Marriott Corporate procedures. The is from the InfoShop.Host country location of environmental documentsArmeniaDate SPI sent to InfoShop: June 16, 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).