Sadia II

completed

Summary Of Project Information (SPI)Project NameBrazil - SadiaRegionLatin AmericaSectorProject No007568Projected Board DateNovember 22, 1996Company NameSadia Concórdia S.A. Indústria e ComércioTechnical Partner and/or Major Shareholders Sadia’s shares are publicly listed in the Sao Paulo and Rio de Janeiro Stock Exchanges. The majority shareholder is the Fontana family with 38% of the outstanding shares and 66% of the voting shares; an additional 10% of the voting shares is held by the Company’s employee welfare foundation. The balance of the outstanding shares is held by a number of smaller shareholders (9%), institutional investors (31%) and foreign investors (17%), including IFC (1.41% shareholding from a previous investment).Project Cost Including proposed IFC investment Project Cost: US$ 505 million. Proposed IFC investment: US$ 40 million, including a US$ 30 million A loan and a US$ 10 million C loan (quasi-equity). Proposed syndication: US$ 160 million for the account of a special purpose trust which will issue Asset-Backed Trust Certificates to be placed with institutional investors.Location of project and Description of site Production and distribution facilities to be modernized and expanded are located in the states of Rio Grande do Sul, Santa Catarina, Parana, Sao Paulo, Rio de Janeiro, Mato Grosso do Sul and Mato Grosso.Description of Company and Purpose of Project Sadia Concórdia S.A. Indústria e Comércio is undertaking a five year, US$505 million investment program aimed at expanding and modernizing production and distribution capacities to allow the Company to meet market expansion plans and maintain its leadership position. Sadia is Brazil’s leading company in slaughtering, processing and packaging of poultry, pork and beef products as well as a producer of soybean meal and oil, animal feed, refined oil and margarine. The Company sells and distributes commodity and branded products in the domestic and export markets. It operates 18 plants throughout south-central Brazil with 20 regional sales units covering 150,000 customers. The Company is integrated with over 6,000 poultry and 8,500 pork farmers who provide it with consistent quality raw material. The 1996-2000 Project includes: (i) increasing production of value added processed products; (ii) expanding poultry and pork slaughtering capacity by 33% and meat processing capacity by 45%; (iii) modernizing and rationalizing slaughtering and meat processing operations to improve efficiencies and lower production costs; (iv) expanding sales and distribution facilities; and (v) increasing soybean crushing and animal feed production capacities to ensure adequate feed supply to its outgrowers. Sadia’s investment program will improve its international competitiveness as a meat processor and food exporter, providing 5,000 additional jobs at its plants and integrating 650 additional pork and poultry farmers in mostly rural areas.Environmental Category and Issues This is an environmental review category B project. Environmental, health and safety issues include air emissions, liquid effluent treatment and discharge, solid waste disposal, fire and dust explosion prevention, use of personal protective gear, and general employee health and safety. Environmental reports submitted by Sadia indicate that operations are not in full compliance with the World Bank guidelines. IFC has therefore required that, as a condition of first disbursement, Sadia submit a Corrective Action Plan (CAP) acceptable to IFC. This CAP will identify the specific actions required, together with an estimate of the costs involved, to bring all operations in compliance with World Bank policies and guidelines. Sadia has committed to bring all operations into full compliance with World Bank guidelines.The Environmental Review Summary is expected to be available on October 18, 1996 from the Public Information Center.Date SPI sent to PIC      October 18, 1996For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 676-0365Environmental 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).