Vilniaus Margarino Gamykla

completed

SUMMARY OF PROJECT INFORMATION (SPI)Project Name Lithuania-Margarine Factory “Vilnius”Region EuropeSector ManufacturingProject No 008431Projected Signing Date August 15, 1997Company Name Margarine Factory “Vilnius”Technical Partner and/or Major Shareholders:Dragsbæk Margarinefabrik A/S: Danish Strategic Partner, 28.6% shareholding. AB Aliejus: Lithuanian Partner, 21.4% shareholding.Melbu Verft AS: Norwegian Partner, 21.4% shareholding.The Investment Fund for Central and Eastern Europe (IØ): 28.6% shareholding.Project Cost Including Proposed IFC Investment:The total project cost is approximately US$2.2 million equivalent, including an IFC Loan of DM 1.025 million (US$605,000 equivalent). The loan will be made under the IØ/IFC Co-Investment Line (project number: 7393), which was approved by the IFC Board on October 3, 1996.Location of Project and Description of Site:The Project site will be in Vilnius, Lithuania, in an industrial area.Project Description:The Project consists of the construction of a margarine production plant which would be the first such facility in the Baltics, replace more costly imports, and meet the growing local demand for margarine. Demand is being fueled by i) the cost advantage of margarine over butter and ii) the increased awareness of the nutritional benefits of margarine over butter. Although initially focused on the Lithuanian market, the Project has the potential to supply Estonia and Latvia, as no trade duties exist within the 3-state Baltic region. The Project is expected to have an annual one-shift capacity of about 5,000 tons.Dragsbæk Margarinefabrik A/S (DB), founded in the 1920s, is a leading Danish margarine producer and partly owned by the Norwegian conglomerate Orkla A/S and partly by private Danish citizens. DB has two factories in Denmark, a subsidiary in Iceland, and employs about 80 people. In 1996, DB had a turnover of about USD 38 million equivalent. A major part of the production is exported.Melbu Verft, established in 1962 as a subsidiary of Melby Fiskeindustri, is a manufacturer of stainless steel equipment for the food processing industry. In 1996, Melbu Verft had a turnover of about US$3.4 million equivalent.AB Aliejus, established in 1913 and majority state-owned, is the leading mayonnaise producer in Lithuania. It has a well established brand name and distribution system, both of which will be used by the Project.Environmental Category and Issues:This is a category B project according to IFC’s environmental review procedures. The main environmental issues are waste water and noise levels. To reduce fat content in wastewater, a grease separator will be installed, and sludge from the separator will be disposed of in a landfill. Noise levels in the production room will be acceptable at below 75 dB(A). Based on its review and analysis, the I Fund has concluded that the Project will meet World Bank environmental, health and safety policies and guidelines as well as Lithuanian requirements.Date SPI Sent to PIC: July 7, 1997For Additional Information contact: Corporate Relations Unit telephone: (202) 473-7711 facsimile: (202) 974-4384