United Pulp and Paper Company Inc.

completed

Summary Of Project Information (SPI)Project Name:Philippines: United Pulp and Paper Company, Inc.Region:East Asia and PacificSector:Project No:009339Projected Board Date:April 8, 1998Company Name:United Pulp and Paper Company, Inc. (UPPC, the Company)Technical Partner and/or Major Shareholders UPPC is owned 38% by the PHINMA Group of the Philippines and 38% by Siam Pulp and Paper Company (SPPC) of Thailand. The remainder of the Company is owned by various individuals and institutions, with no investor owning more than 4% of the Company.Project Cost Including proposed IFC investment Total estimated cost is PHP 3,931 million or US$98.4 million equivalent. The proposed IFC investment consists of an "A" Loan of US$20 million for IFC''s own account and a quasi-equity investment of US$7.5 million for IFC''s own account.Location of project and Description of site UPPC''s plant is located on a 46-hectare site in Calumpit, Bulacan about 50 kilometers north of Metro Manila, where the Company commenced its initial operations in 1969. Description of Company and Purpose of Project UPPC is the largest producer of extensible sack paper, corrugating medium and testliner in the Philippines. The Company commissioned a second paper machine in November 1998 and quadrupled its production capacity. The Company used short-term bridge loans to complete its expansion. However, as a result of the regional economic crisis the Company is unable to replace its bridge loans with long-term financing. In addition, the Company is also over-leveraged.IFC proposes to financially restructure UPPC by increasing its equity base and refinancing existing short-term debt. IFC would assist the Company in approaching its existing lenders to convert their short-term loans into long-term loans. The proposed transaction would also help finance the Company’s outstanding contract payables and help meet its working capital requirements.Environmental Category and Issues This is a category B project according to IFC''s environmental review procedure. Key issues which were examined during the environmental and social review included: liquid effluent handling and treatment; air emissions; solid waste disposal; handling of hazardous materials; fire protection and emergency response; and general worker health and safety.Process wastewater from the paper machines is handled in a new, state-of-the-art activated sludge wastewater treatment plant with ample capacity for the new mill. The mill is also equipped with systems for fiber recovery and water recycling. All liquid effluents from the site will meet World Bank Group guidelines and Philippine government requirements. UPPC has just completed construction of a new 30 MW cogeneration power plant, with boilers fitted with state-of-the-art combustion controls; measured stack emissions meet World Bank Group guidelines. Solid wastes are largely rejects from waste paper cleaning, and these are landfilled on the site.Appropriate fire prevention measures are incorporated throughout the mill. UPPC has achieved ISO 9002 quality certification, and is presently preparing for ISO 14001 certification. UPPC has prepared Environmental Impact Assessments for both the mill expansion and the cogeneration power plant to meet the requirements of Philippine regulatory authorities.    The is from the Public Information Center.Date SPI sent to PIC:March 8, 1999“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384Environmental 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).