Simplemente Madera Group

completed

In September of 2007, the category 5 hurricane “Felix” cut through the northeastern corner of Nicaragua affecting an estimated 1.2 million hectares (ha) of mostly government and indigenous forest lands in the RAAN (Región Autónoma del Atlántico Norte or North Atlantic Autonomous Region).The project consists of: - the acquisition of land affected by hurricane Felix; - investments in infrastructure such as building access roads, and machinery and equipment to expand harvesting and processing operations; - working capital and contingencies required for conducting salvage logging operations and - replanting/ reforestation program on the cleared lands to ensur efutreu sustainability of the company’s wood processing operations. In November 2007, the sponsors acquired approximately 3,000 ha of land in the hurricane-affected forest from private land owners and began salvage logging operations on site in March 2008. In addition to this property, the sponsors have identified additional land in the RAAN comprising 8,000 to 9,000 ha of forest destroyed by the hurricane, the acquisition of which will give the company economies of scale. The tropical hardwoods harvested from these lands will be processed into FSC-certified decking, flooring, doors, furniture, dimensional and structural lumber, and sold on both the domestic and international markets. Concurrent with the salvage operations, the company plans to replant select areas native hardwood species common to the region while setting aside areas for natural re-growth. Reforestation and FSC certification are fundamental principles of the project. Reforestation will ensure the return of forest cover on the property and any other properties involved in the project, as well as ensuring a consistent and sustainable supply of wood for the Group’s sawing and milling operations in the future. Both the property and the Xiloa processing facility are owned by MAPIINICSA (Maderas Preciosas Indígenas e Industriales de Nicaragua S.A), prospective IFC Borrower, which in turn will be controlled by Simplemente Madera Group (SMG or the Group), a holding company to be established.