S.A. San Miguel A.G.I.C.I. y F.

completed

Summary Of Project Information (SPI)Project NameARGENTINA - S.A San MiguelRegionLatin America and the CaribbeanSectorProject No009190Projected Board DateOctober 6, 1998Company NameS.A. San MiguelTechnical Partner and/or Major Shareholders S.A. San Miguel (or “San Miguel”, the Company), is the leading lemon producer in Argentina and one of the largest in the world. The Company’s operations are fully integrated: it grows lemon on some 5,400 ha of own plantations that supply approximately half of its lemon needs, and operates two packing plants and two processing plants in the Province of Tucuman. In 1997, San Miguel’s consolidated sales amounted to US$87 million. The Company sells fresh lemon fruits as well as industrialized lemon products such as lemon juice, lemon oil, and dehydrated lemon peel. More than 70% of the Company’s revenues are derived from exports, essentially to Europe, the USA, Canada, the Far East, and the Middle East. The Net Worth of the Company as of end of 1997 was US$89.6 million while net income for the same year was US$10.5 million.      Project Cost Including proposed IFC investment The total investment is estimated at about US$28 million. The IFC loan of US$12 million will finance around 43% of total investment, while 57% will come from the company''s own resources. Location of project and Description of site The project is located in Famailla, about 30 km from San Miguel de Tucuman, where one of the Company''s processing plants and one of its packing plants are located.     Description of Company and Purpose of Project S.A. San Miguel is the leading company in the citrus sector in Argentina. Comprised mainly of family businesses, the industry has recently started a process of consolidation. The top-tier companies are upgrading their operations to better respond to the changes in the distribution system in the Western markets, which requires substantial investments. To consolidate its leadership position, S.A. San Miguel, has already implemented a corporate restructuring in 1994 that has strengthened its financial base and marketing capabilities. The Company is currently implementing an expansion program aiming at doubling its processing capacity, diversifying risks in terms of plantation location, and maintaining the proportion of own fruit supply over the coming years, to address anticipated growth in demand.The proposed project consists of four main components: (i) the expansion of the fruit processing and packaging facilities; (ii) the investment in new orchards and new irrigation equipment; (iii) the rehabilitation and maintenance of the existing orchards; and, (iv) the purchase of agricultural equipment. IFC is interested in extending its reach to second tier companies aiming at international competitiveness, to sectors with a comparative advantage but for which long-term funding is not easy to obtain, and to less developed provinces. With the help of IFC, S.A. San Miguel will further improve its competitiveness in the world citrus sector, where Argentina has a strong comparative advantage. As an example of successful transition from a professional second tier company into a fully global company, this will have a strong demonstration effect in the province of Tucuman. The project will also generate direct benefits to the local economy through the creation of new jobs in a region facing a high level of unemployment and affected by the restructuring of its sugar industry, improved efficiencies in local lemon production and processing, expanded capacity to absorb increased lemon production when all the lemon trees will come into production, and the provision of alternative use for the land that has been so far cultivated with cane. Environmental Category and Issues This is a category B project according to IFC’s environmental review procedure. Environmental, occupational health, and safety issues that were analyzed included: plantation site selection and associated social impacts; environmental, health and safety performance of the existing and expanded packaging and processing plants; wastewater treatment plant(s) capacity and sludge disposal; solid waste management and disposal; use and handling of pesticides/hazardous materials in the plantations; and general employee health and safety, including training. Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that S.A. San Miguel''s proposed project is designed to meet World Bank Group environmental, health and safety policies and guidelines as well as host country requirements.   The is from the InfoShop.Date SPI sent to InfoShop September 4, 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).