Puertas Finas de Madera Montealban, S.A. de C.V.

completed

With the objective of increasing the company''s production capacity and further improving its efficiency, the project comprises:(i) increasing the production capacity at the company''s existing door plants;(ii) constructing a new plant in Guerrero for plywood and veneer production;(iii) constructing a new facility in the State of Mexico for the productions of wooden reels and truck platforms, etc;(v) opening 4 new retail stores in various cities;(vi) upgrading the environmental aspects of the company''s production facilities; and (vii) restructuring bridge loans incurred for the project.Development ImpactsThe proposed project is expected to bring about the following development impacts: (i) The company''s production facilities would serve as important direct employment pools, economic stimulators, and promoters of sustainable forestry operations in various parts of Mexico, particularly in the states of Oaxaca and Guerrero - the second and third poorest states of the country; (ii) With its long-term supplier relationships with numerous communities in Oaxaca and Guerrero, the company will continue helping the communities'' development by: (a) constructing and maintaining the roads leading into the forests; (b) providing technical assistance on various aspects of forestry operations; (c) providing the communities with a legally constituted enterprise which buys their products at market prices; and (d) providing a stable source of timber demand, which translates into a stable source of income for the communities; (iii) The project will enable the company to increase its exports, and substitute imported raw materials with in-house manufactured goods, thereby reducing its production costs and increasing its international competitiveness; and (iv) the project will indirectly positively impact the communities as, at IFC''s request, the company will formalize a corporate policy that seeks to assist communities in reaching Forest Stewardship Council (FSC) certification and attain better forest management practices.IFC RolesIFC can play a significant role in this project: (i) IFC''s investment will provide the necessary long-term financing for a medium-sized Mexican company. Even though the credit rating of Mexico has been upgraded, long-term financing is still very limited to the top-tier companies and is practically unavailable for middle market companies and small and medium enterprises (SMEs). IFC''s investment in the project would provide the company with the lacking long-term financing to meet its expansion plans and asset/liability matching requirements; (ii) IFC can help the company in its process of obtaining the FSC certification, with which Puertas Finas will be able to gain access to the European market and continue supplying to the US and Canada; and (iii) IFC''s involvement will result in substantial improvements to the health and safety conditions at the company''s plants by subjecting the Puerta Finas to the World Bank Group social and environmental guidelines.