Sugal Chile

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 The proposed IFC investment is an A loan of up to US$25m and an MCPP loan of up to US$25m to Sugal Chile Limitada (“Sugal Chile”) to finance the FY23-25 capital expenditures program and related permanent working capital needs, including, among others, a new tomato paste production line in Talca, the maintenance of the Tilcoco Plant, decarbonization of energy consumption by replacing a coal boiler, and process re-engineering (the “Project”). Sugal Chile is the Chilean subsidiary of Sugal B.V (the “Group”), a Portuguese family-owned company and the second largest producer of tomato paste in the world with operations in Portugal, Spain, and Chile. In Chile, the Group has an integrated business model, with 2,500 ha of own leased tomato farms and two processing plants (Quinta Tilcoco in the O’Higgins region and Talca in the Maule region). The company’s main products are variations of tomato paste, of which 95% is exported and used by its clients to manufacture consumer retail products.  Sugal Chile produces and purchases agricultural products essential to its core business within the Chilean matorral ecoregion, a region subject to extensive grazing, logging and urbanization. Sugal Chile sources tomatoes from its own farms (approx. 2,500 ha), leased for 2-4 year periods on average, and from third-party suppliers (approx. 4,850 ha) within regions of consolidated agricultural production. Farms are located within a 300 km radius of the two processing plants. No significant natural habitat conversion related to Sugal Chile’s own tomato farms and supply chain is expected from this investment. Sugal Chile offers and finances inputs to farmers (e.g., seeds, irrigation equipment, fertilizers, and crop protection products)  as well as provides them with services (e.g., harvesting). Farms are primarily irrigated by drip (86%) and conventional means (channels and wells, 14%).   The Tilcoco Plant has the capacity to process 8,000 metric tons (MT) of fresh tomatoes per day in 8 production lines and occupies an area of 100,000 m². The Talca Plant has the capacity to process 4,000 MT of fresh tomatoes per day in 4 production lines and occupies an area of 150,000 m². Plants operate approximately 4 months per year (January-April) during the tomato harvesting season. Both plants were acquired by the Group in 2012 and are located in urban areas with agricultural, residential, and industrial dwellings on its perimeters. Expansion of existing industrial facilities is not planned from this investment as the new line will be incorporated within the existing Talca facility.