Kronospan Bulgaria EOOD

completed

Summary Of Project Information (SPI)Project NameBulgaria - Kronospan Bulgaria RegionCentral and Southern EuropeSectorManufacturingProject No009726Projected Board DateOctober 4, 1999Company NameKronospan Bulgaria EOOD Technical Partner and/or Major Shareholders Kronospan Bulgaria EOOD, established in 1996, is a limited liability company incorporated in Bulgaria. The company is 100%-owned by Kronospan Holding Limited (Cyprus), the parent company of the Kronospan Group in Eastern Europe. The Kronospan Group, a European leader in wood panel board manufacturing, is the sponsor of the project.Project Cost Including Proposed IFC Investment The project cost is estimated at DM101 million. IFC''s proposed investment consists of an A loan of DM24 million and a syndicated B loan of DM18 million.Location of project and Description of site The particleboard mill is situated on the outskirts of the city of Bourgas in eastern Bulgaria on the Black Sea coast. The location provides the mill with convenient sea and land transport connections to the Middle East, North Africa, Turkey and Greece. The mill is situated on 26 hectares, of which only a portion is used for production purposes, therefore providing possibilities for further expansions.Description of Company and Purpose of Project The project will consist of upgrading existing equipment, principally the preparation areas, and the commissioning of a second particleboard line which will be constructed using a mixture of refurbished, relocated and new equipment. The capacity of the new line will be 100,000 m3/year, and it will be located in an existing building.The project will double current particleboard production capacity, and substantially increase melamine-facing capacity. The added new capacity will achieve economies of scale, which are critical for the industry. The project is expected to boost margins, enhance the company''s competitive position in Southeastern Europe and provide strategic diversification. In addition, the project will contribute to the modernization of the Bulgarian wood panel industry, which is currently characterized by inefficient, low-quality operations and will have a potentially strong impact on the development of the furniture industry in the country.IFC’s role in the proposed project is three-fold: (i) increase confidence in and support for the government’s privatization efforts; (ii) act as a catalyst for foreign investment and private sector participation in Bulgaria; and (iii) help the sponsors gain access to long-term financing.Environmental Category and Issues This is a category B project according to IFC''s environmental review procedure. Environmental, occupational health and safety issues which were examined during the review of this project include: site selection and current and previous site land use; air emissions; wastewater treatment; solid waste handling and management; wood supply and sustainability of forests; fire protection and emergency response; and general worker health and safety. The IFC Technical and Environment Department staff have reviewed the project site and conclude that this project will be implemented and managed in accordance with World Bank Group environmental, health and safety policies and guidelines and host country requirements. IFC will monitor project performance during the lifetime of the project. The Environmental Review Summary is available from the InfoShop.Host country location of environmental documentsPublic Relations Office Kronospan BulgariaSeverozapadna Promishlena Zona Bourgas 8000BulgariaDate SPI sent to InfoShop September 3, 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).