Stora China-II

completed

Stora Enso Oyj (Stora Enso or the sponsor), the world’s largest paper and board producer in produced tonnes and number three sawn timber producer, has approached IFC to extend its existing loan facility to finance the development of its timber plantation and related investments in China. China is the second largest and fastest growing paper market in the world, yet it is critically short of timber/fiber. China accounts for over a third of the total increase in global paper capacity for the period 2001-2006, however the country’s short supply of fiber has led it to import unsustainably harvested fiber from neighbors such as Russia or the Pacific Rim. Stora Enso’s current projects in China include expanding its plantation in the Guangxi province of Southern China, which began operating in 2002, a paper mill in Suzhou, which was acquired by Stora Enso in 1998 and a joint venture with a Chinese company, Shandong Huatai Paper; this project will include transferring an existing paper machine to China. Stora Enso’s immediate financing need is to continue to help cultivation of their plantation. These investment projects, combined with Stora Enso’s other possible investment projects in China comprise an estimated $500 million investment program over the three years. In June, 2005, IFC signed a loan facility agreement (the Existing Facility) with Stora Enso for $75 million. However, to meet their increased financing needs in China, Stora Enso has asked that IFC increase the amount of the facility by $225 million (the Increased Facility), bringing the total financing provided/arranged by IFC to $300 million (together, the Facility).