Modern Karton

completed

Summary Of Project Information (SPI)Project NameTurkey-Modern Karton Sanayii ve Ticaret     RegionEurope 1SectorProject No008425Projected Board DateFebruary 15, 1998Company NameModern Karton Sanayii ve TicaretTechnical Partner and/or Major Shareholders The project sponsor is the Eren Group, a diversified medium sized second-tier Turkish group with investments in eleven companies in the textiles, cement and paper sectors. The shareholding structure of Modern Karton as of December 31, 1996 was as follows: the Eren Group (75%); Dentas, another Turkish paper producer, (20%) and others (5%). Project Cost Including Proposed IFC Investment The project cost is estimated at US$89.3 million. The proposed IFC investment is a loan of US$30 million, of which US$10 million will be for the account of participants. Location of Project and Description of Site Modern Karton’s two existing paperboard lines are located in Corlu, an industrial area, about 100 km west of Istanbul. The new production line will also be installed at the same site. The plant is well connected to the road network in Turkey.Description of Company and Purpose of Project(include IFC’s Role and Development Impact) Modern Karton is the largest private sector producer of corrugating packaging materials in Turkey. The Company’s expansion and modernization program has many components, the most important of which is the expansion of the Company’s capacity from 90,000 tpy to 290,000 tpy by installing a new, complete production line for white-top liner, test liner and fluting. This is in line with Modern Karton’s strategy of removing capacity constraints on existing equipment and improving quality to meet competition particularly from imports from the EU. The additional production will primarily be sold on the domestic market.  IFC’s role in the project will include providing long-term financing to the Company, assisting a second-tier Turkish company access international financial markets through the syndication and providing technical assistance through its review and suggestions in evaluating the project design and the cost structure of the project. The project is also expected to have a positive development impact: it will create 40 new direct jobs in Turkey and 400 more indirect jobs; it will impact the environment positively since waste paper collection and recycling will be stimulated due to the substantially larger waste paper needs of the Company; it will raise skill levels in Turkey since no other production facility in Turkey uses the modern technology that the Company intends to use; it will benefit customers from improved product quality and new and more sophisticated products; and it will assist a good company in its transition to becoming an internationally competitive company.    Environmental Category and Issues This is a category B project according to IFC’s environmental review procedure. The expansion and modernization project will take place on the existing facility and no additional land will be acquired. The project does not therefore involve any relocation or resettlement. The Sponsor will buy all electricity and steam needed for the project from Modern Enerji which means that MK will not have air emissions. The industrial liquid effluents from the plant will be treated in a biological wastewater treatment plant. MK will therefore comply with local governmental standards and World Bank guidelines for liquid effluents. Modern Karton will establish Safety and Occupational Health programs to comply with governmental standards and World Bank guidelines. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC has concluded that the proposed project is being designed to meet Government of Turkey requirements and World Bank policies and environmental, health and safety guidelines. IFC will monitor MK’s ongoing compliance with World Bank policies and guidelines during the life of the project by evaluating the environmental performance reports submitted annually to IFC by the Sponsor, in conjunction with the annual financial report, and by conducting periodic site reviews during project supervision.The is from the Public Information Center.Date SPI sent to InfoShop January 15, 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).