Teteks 2

completed

Teteks operations are currently organized into four divisions: (i) spinning; (ii) weaving; (iii) knitting; and (iv) ready-made-garments. The production process starts with producing yarn from wool tops, and continues into the production of fabrics, blankets, knit products and garments. The company employed 3,864 workers as of 2000 year-end. Teteks has a few non-textile subsidiaries in Macedonia including Teteks Banka. Business activities of the non-banking subsidiaries include trading, recycling of waste materials from the textile operations, production of packaging materials mainly for the textile products, a gas station, transportation, and a travel agency. Teteks also has representative offices in the U.S., Bulgaria, Germany, Croatia, Albania, Bosnia and FR Yugoslavia, which serve to support the company''s export activities. The proposed investment should assist Teteks in achieving its two core strategic objectives: (i) to increase exports by improving the quality and range of its products, and (ii) to reduce costs, both in an environmentally sound and socially responsible way. The proposed project program encompasses the following main components.Textile operations modernization program: Teteks plans to further modernize its spinning, weaving, knitting, and ready-made-garments facilities. This investment should enhance Teteks'' export opportunities by both improving the quality of its products and its product development capacity and reducing its costs. Energy efficiency and environment component: A portion of the textile project, financed by a grant from the government of Netherlands, is investment in Teteks'' energy plant to reduce air and soil pollution and energy costs. Teteks Corporate Citizenship Initiative (Teteks CCI): A portion of the project is to establish the Teteks CCI with objective to provide financing to Teteks'' laid-off workers to help them start their own small businesses. Through this initiative, Teteks would help the community by providing commercially sustainable market opportunities to small and medium enterprises (SMEs), creating new job opportunities, and fostering entrepreneurship. Teteks Banka will be the manager of the Teteks CCI. On a best efforts and as needed basis, IFC would raise trust funds to finance the technical assistance development programs for the company''s laid-off workers and/or for the institutional development of Teteks Banka. Short-term debt repayment and refinancing will also be part of the project. This will improve company''s debt service capacity and reduce overall interest expense. Waste water treatment plant: A portion of the project would finance a waste water treatment plant. If by January 2003 the government has not initiated building a municipal treatment plant, Teteks has agreed to build a system to ensure its waste water is treated prior being released by the end of 2003. This is second IFC''s project with Teteks. IFC has already provided a US$1.5 million equivalent loan financing to Teteks in 1997, supporting a modernization program which has successfully been implemented. The second project with Teteks is consistent with the initially proposed phased approach in implementing the company''s modernization program. Given the visibility of Teteks and this project in the region, the project will serve to encourage additional foreign direct investment in Macedonia at a time when foreign investors are wary because of regional instability in south-east Europe.