Kleppe S.A.

completed

Summary Of Project Information (SPI)Project NameArgentina-Kleppe II     RegionLatin America and CaribbeanSectorProject No007494Projected Board DateMarch 26, 1997Company NameKleppe S.A.Technical Partner and/or Major Shareholders The project is owned by the Kleppe group of companies, including: Kleppe S.A. which operates the fruit business of the group in the central Rio Negro valley; Neuquen Refrescos S.A. which operates a soft drink bottling company for such brands as Coca Cola; and El Caldero S.A. which consist of the plantations in the Upper Rio Negro valley. All of the three companies have been owned and controlled by Mr. Enrique Kleppe. The group has recently decided to concentrate its corporate activities on the fruit business and sell the soft drink operations. As part of this effort, Neuquen Refrescos has been sold and El Caldero S.A. is being merged with Kleppe S.A. Project Cost Including proposed IFC investment Project cost is estimated at US$12 million. IFC is considering an A loan of US$6 million.Location of project and Description of site The project is located in the central region of the Rio Negro valley, an area with a low level of resource utilization and where arid land is being recuperated through irrigation by the Company. The project is the main employer in the region of Coronel Belisle, and has contributed significantly to its development area as the main fruit producing area in Argentina.Description of Company and Purpose of Project Kleppe, an existing IFC client located in Rio Negro Province in Argentina, is undertaking an investment program with the following main elements: divestiture of the group’s soft drinks bottling business and focus on the fruit production and marketing activities, merger and streamlining of the remaining fruit related companies, expansion of fruit plantations, as well as cold storage and packing facilities. The expansion would be achieved through capacity increases in the various facilities, and to a smaller degree acquisitions of existing plantations. The expansion program would strengthen one of the important integrated fruit operations in Argentina, thus protecting and generating employment, including creation of significant seasonal employment for fruit pickers from Tucuman province. Kleppe, as one of the companies on the leading edge of the fruit sector in the Rio Negro valley, would continue to stimulate development of the sector and help increase exports and generation of foreign exchange.       The project is consistent with several priorities in IFC’s strategy in Argentina. First, IFC would provide long-term funding to a family owned, mid-size company. In Kleppe, IFC would support a company that is rather small compared to the overall profile, at least in Latin America. In the proposed transaction, IFC would continue to make a special effort to work with a client that, despite its business potential and development impact, would have no access to long term funding in Argentina because it is a relatively small company. Therefore, IFC support would be critical to help this program get off the ground. Second, IFC’s support will help increase the export of high value agricultural products and diversity Argentina’s export base.Finally, both IFC and IBRD have identified supporting economic development in the interior of Argentina as a priority. An IBRD adjustment loan to support provincial reforms was approved by the Board earlier this year, and IFC has been working closely with the Bank in assisting to privatize some provincial enterprises. In December 1995, the Board approved an investment in Ceramica Zanon S.A. located also in the Neuquen-Cipoletti metropolitan area and the largest industrial employer there.Environmental Category and Issues The project is a Category B project under the IFC’s environmental guidelines. The company''s program for mitigating negative environmental impacts has been approved by the Environmental Unit. This includes integrated pest management practices in the farms; correct training of workers in the use of pesticides, provision of protective clothing and regular medical supervision; treatment of the packing house effluent before discharge into the municipal sewer system to the required standards acceptable to the municipality. CFC refrigerants are not used in the cold storage units.      The is from the Public Information Center. Date SPI sent to PIC February 26, 1997For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 676-0365Environmental 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).