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| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. |
Summary of Project Information (SPI) |
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| Project number | 10627 |
| Project name | Teteks 2 |
| Country | Macedonia, Former Yugoslav Republic of |
| Sector | Textiles, Apparel & Leather |
| Department | Global Manufacturing & Services |
| Company name | Teteks A.D. Tetovo |
| Environmental category | B |
| Date SPI disclosed | July 9, 2001 |
| Projected board date | August 20, 2001 |
| Status | Active |
| Previous Events | Invested: July 2, 2002
Signed: March 15, 2002
Approved: December 12, 2001 |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Teteks, A.D. (the company or Teteks), a joint stock company established in 1951. Teteks is 100% privatized with a diverse shareholding structure. The company is the largest wool textile mill in Macedonia and the only vertically integrated textile operation in Europe. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at US$10.4 million equivalent. IFC has been requested to provide up to US$5.3 million equivalent in a form of a senior loan to Teteks of which US$5.0 million would be to help finance the company's textile operations' investment program, and US$0.3 million would be to finance a newly formed Teteks Corporate Citizenship Initiative (Teteks CCI), a program that would help create job opportunities. |
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| Location of project and description of site |
| The location of the project site is in the town of Tetovo, FYR Macedonia at Braka Miladinovci 1, about 40 km west of Skopje. The project site is in an urban area. |
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| Description of company and purpose of project |
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. |
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| Environmental and social issues - Category B |
This is a Category B project according to IFC's Procedure for Environmental and Social Review of Projects, because a limited number of specific environmental and/or social impacts may result which, can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
To view the environmental documents for this project, click here
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| Location of environmental documents in locally affected community |
The company will display the environmental documents at the following locations:
1. The city post office, Tetovo, Macedonia.
2. The local municipality building, Tetovo, Macedonia.
3. In the main office of each of the four factories at the Teteks plant, Tetovo, Macedonia.
4. In the common services department office at the Teteks plant, Tetevo, Macedonia. |
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| To contact the project company, please write to: |
| Teteks <Teteks@Mt.Net.Mk> |
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