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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 | 10803 |
| Project name | ICME ECAB |
| Country | Romania |
| Sector | Primary Metals |
| Department | Global Manufacturing & Services |
| Company name | ICME ECAB S.A. |
| Environmental category | B |
| Date SPI disclosed | May 15, 2001 |
| Projected board date | June 15, 2001 |
| Status | Active |
| Previous Events | Invested: January 24, 2002
Signed: October 24, 2001
Approved: June 27, 2001 |
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| Project sponsor and major shareholders of project company |
The project sponsor is Hellenic Cables S.A. (Hellenic Cables). Hellenic Cables (which owns 81% of ICME ECAB's shares), is the leading company in the field of cables and conductors in Greece. It produces a wide variety of products such as: building wires, control and instrumentation cables, overhead conductors, medium and high voltage cables, enamelled wires telecommunication cables with copper and fiber optic conductors, data cables. Over the past years, the company has focused its efforts and investments on product quality and cost. As a result, Hellenic Cables holds several international quality certificates. Hellenic Cables operates three plants north of Athens, and controls two subsidiaries: Telecables, a company that was set up as a joint venture with Siemens A.G., and ICME ECAB in Romania.
The Danube Fund, Greece, owns about 14% of ICME ECAB's shares. The balance of about 5% are floating shares. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at about Euro 40 million. The proposed IFC investment is up to Euro 10 million A Loan for IFC's own account. |
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| Location of project and description of site |
| The project is located in an industrial area on the eastern side of Bucharest, Romania. The site covers an area of about 28 hectares. |
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| Description of company and purpose of project |
The proposed project is to revamp a cable manufacturing plant, ICME ECAB S.A. (ICME or the project), located in Bucharest, Romania, and to transform it into a cost efficient facility producing a wide range of high quality cables, conductors, and wires. The total project cost is estimated at about Euro 40.1million. At Project completion, ICME’s nominal capacity will be about 70,000 tpy. The project will be implemented by Hellenic Cables S.A., the leading cable and conductor manufacturer in Greece with more than 50 years industry experience.
As part of the project, Hellenic Cables will refurbish the plant, improve production methods, and facilitate the transition to higher value-added products. After the completion of the investment program, ICME will have: i) the ability to produce a wide range of high value-added products; ii) the required flexibility to adapt to changing local and international markets; and iii) the capacity to meet expected demand growth from new infrastructure projects in Romania and neighboring countries.
Background
The Austrian Industrial Group, ISOVOLTA, a world leader in the insulating products market acquired the state-owned ICME S.A, (ICME ECAB's predecessor), in April 1998. In April 1999, ICME S.A. was split into two companies, ICME ECAB, manufacturing cables, and ICME ELECTROIZOLANTE, manufacturing insulating materials.
Hellenic Cables S.A., Greece, acquired 94% of ICME ECAB in 1999, from ISOVOLTA, Austria, and from other smaller shareholders, including SIF Oltenia, one of the largest Romanian Investment funds with equity holdings in over 400 companies. The transaction was done through the Romanian Stock Exchange as ICME ECAB was listed on the Romanian O-T-C market. Currently, Hellenic Cables owns 81% of ICME ECAB's shares, the Danube Fund, Greece, owns about 14%, and the balance of about 5% are floating shares.
IFC Role
Investment in cable production is often seen as a precursor for investment in important telecom and power infrastructure. Therefore, with the increased demand for improving communication and power networks in Romania, Hellenic Cables sees a market opportunity for expansion of its original small cable investment. As this would be one of the first overseas manufacturing investments for the established Greek company, it is seeking IFC's help in expanding in riskier operating environments. IFC's presence therefore is important in mitigating some of the risks that Hellenic Cables would face in Romania. IFC is also playing an important role in structuring the financial plan and in bringing in another lender into the transaction while also helping to sustain a major productive asset and a key employer in the region. This is particularly important for Romania as foreign direct investment (FDI) continues to be low and any efforts to increase investor interest by institutions, such as IFC, are well appreciated by the government, and are an intrinsic part of IFC's strategy.
Developmental Impact
The proposed project will have significant developmental impacts:
(i) Demonstration effect: In view of the perceived macroeconomic and political risks to investing in Romania, IFC's participation, along with Viohalco, a well reputed player in the field of metal processing and distribution, will have a significant demonstration effect in supporting foreign direct investment in Romania's manufacturing sector. FDI, an essential factor for sustainable economic growth, has been low in Romania, and has started falling back sharply after reaching a peak in 1998.
(ii) Know-how transfer: The project will benefit from the management expertise of a strong sponsor, who has significant technological know-how in cable, conductor and wire manufacturing for both investment and production. Also, the sponsor will bring into the project advanced marketing and sales techniques and a proven quality control system.
(iii) Positive environmental impact: The proposed project will have a positive environmental impact. This will include installation of new collecting, recycling, and recirculating systems; implementation of significantly better employee health and safety practices, compared to past and present practices in Romania. IFC's participation and expertise will contribute to the realization of an investment program which meets all World Bank, EU, and Romanian environmental standards.
(iv) Improved skills base: An important part of the sponsors' support will be on-the job training provided by Hellenic Cables, including employee training in Hellenic Cables or Telecables plants in Greece.
(v) Increased employment: The project will create employment in Romania, both directly and indirectly, an important impact in a period of high unemployment in the country. The modernization of the factory will create openings for professionals, as well as for highly skilled workers. Additional employment is expected to be generated in the supply stream and in ancillary activities. In addition, temporary employment will be provided to local labor during the refurbishment phase.
(vi) Supporting sustainable industries producing higher value added products: The project would help the Romanian government support sustainable industries with strong sponsors, producing higher value added products.
The project is a model case of regional investment expansion, which is very critical for improving the stability of the region by strengthening the cross border cooperation and regional economic growth. Over the long term, the project is expected to serve as a model for further private-sector development by: (1) providing a clear example of the application of modern management and corporate governance in Romania; (2) attracting a sponsor with first-class expertise; and (3) promoting the development of a key industry for the Romanian economy.
World Bank Group Strategy
The World Bank Group lending and advisory services are aligned with the priorities of the Romanian government to promote growth through reform and private sector development. The proposed project fits well with the World Bank Group strategy of promoting private sector development by supporting Romania's privatization efforts. It is part of IFC's effort to finance recently privatized enterprises and support investment opportunities in manufacturing and various sectors where Romania has a comparative advantage. In addition, this project is in line with IFC’s strategy to facilitate and promote foreign investment flows and increase investor confidence in the country. |
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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 Environmental Review Summary (ERS) will be posted in the notice board at the entrance of ICME: 42 Drumul intre Tarlale Str. Bucharest, Romania.
In addition an announcement regarding the ERS will be made in a local newspaper. |
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| To contact the project company, please write to: |
Mr. Periklis Sapountzis
General Manager
tel.: 40-1-255-6259
fax 40-1-255-1144
42 Drumul intre Tarlale Str.
Bucharest 3, 73644, Romania |
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