Nature Forestry

completed

China Flooring Holding Co., Ltd. (“the Company” or “Nature”) is one of the largest flooring manufacturers in China. The Company, which was established in late 2007 based on the restructuring of its fully owned onshore wood flooring business in China, has solid wood flooring and engineered flooring manufacturing sites and lumber mills in China and in Peru. In China Nature owns and operates six manufacturing sites while another 13 are operated by Authorized Manufacturers (AMs: previously referred to as original equipment manufacturers or OEMs) who supply exclusively to Nature. In Peru, Nature owns and operates one natural forest concession, one lumber mill, while one other concession (Majeryja), two further mills and a flooring factory are AMs. Nature listed on the Hong Kong Stock Exchange in mid 2011.IFC’s first investment with Nature was made in 2008. Since that time, Nature has acquired forest concession assets, specifically the Nature America Peru SAC natural forests concession in Yurimaguas, Peru (46,347ha) and the Ninglang (4,445ha) and Yingjiang (3,718 ha) mixed woods concessions in Yunnan Province, China. Nature America is operational, the Yunnan assets are both pre-operational (i.e. at the time of this disclosure, no harvesting has taken place. An AM-like entity in Peru holds the Maderera del Rio Yaverija (“Maderyja”) concession (49,556 ha) in Madre de Dios. All of the Peruvian concessions are certified to the Forest Stewardship Council Forest Management (FSC-FM) standard and all the owned and operated lumber and finished flooring mills are operating under valid FSC COC certifications. Further details on these aspects are provided in the PS6 analysis. As the Company grows it seeks to develop plantation resources which it can control and which hedge against future wood price increases. Specifically, Nature is seeking for a potential acquisition plantation forests in the Guangxi Zhuang Autonomous Region of China (“the Project”). At the time of this disclosure, the consideration of the Project by the Company is at early stage and there is no certainty of completion. The Company has not signed any letter of intention or any legally binding agreement for the Project. IFC is proposing a $40m financing package to support the development of forest resources business of the Company, including the Project. The Environmental and Social Review Summary for the original investment details Nature’s group level operations: where relevant to the proposed new financing, updates have been captured in this document. The proposed 33,000ha plantation in Jiangxi described in the original ESRS did not go forward.Further details of the project are provided in the Summary of Investment Information (SII).