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| Asnova III |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment 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. Board dates are estimates only. |
| Project number | 28150 |
| Company name | LLC Savservice Center |
| Country | Ukraine |
| Sector | Wholesale and Retail Trade |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Pending Disbursement |
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| Date SPI disclosed | April 14, 2009 |
| Projected board date | May 18, 2009 |
| Previous Events | Signed: June 11, 2009
Approved: June 3, 2009 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
LLC Savservice Center (“Savservice Center” or the “Company”) is a Ukrainian company involved in the distribution, warehousing and logistics of fast-moving consumer goods (“FMCG”), as well as in the development of warehouse facilities. Savservice Center carries out its activities under the trade names of “Savservice”, “Mova” and “Komora” through a network of subsidiaries with presence in 13 regions of Ukraine.
To support its operations, the company partially or fully owns and operates two warehousing and logistics facilities in Kyiv and the Kyiv region, maintains a fleet of leased and owned vans and employs approximately 2,300 people. In addition, the company rents warehouse space from third parties throughout Ukraine.
Responding to challenges presented by the current difficult financial market situation, the company plans to reduce its reliance on short-term debt and to increase the portion of its working capital that is financed with long-term loans. At the same time, Savservice Center’s logistic services subsidiary, Komora-S, continues to invest in modern warehousing equipment to improve its efficiencies and to remain a competitive and reliable supplier of high-quality services for its clients despite instability in the markets. To support these crisis-response initiatives (the “Project”), Savservice Center has requested a $12 million long-term loan package from IFC. |
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| Project sponsor and major shareholders of project company |
| The sponsor of the project is CJSC Asnova Holding (“Asnova” or the “Sponsor”), which fully owns the company. Asnova was founded in 1992 and is currently owned by 8 reputable Ukrainian businessmen. In addition to Savservice Center, Asnova and its shareholders are involved in a number of other businesses in the distribution, retail and real estate sectors in Ukraine. |
| Total project cost and amount and nature of IFC's investment |
| The total cost of the project, which mainly comprises the refinancing of existing short-term loans, is $15 million. The project will be financed by IFC’s corporate loan package to the company and its subsidiaries and internally generated cash. The proposed IFC loan package comprises a $7 million A loan and a $5 million C loan. The internally generated cash amount needed to finance the project is $3 million. |
| Location of project and description of site |
| Part of the project financing will be used to replace short-term debt that was used to purchase warehouse equipment used by Komora-S at a rented warehouse in the West Gate logistic park at 21 km Zhitomirskoye Shosse, Stoyanka, Kyiv-Svyatoshinsky District, Kyiv Region, Ukraine. In addition, long-term working capital financing will be provided to the Company’s subsidiaries active in the Dnipropetrovsk, Cherkasy, Chernigiv, Chernivtsy, Ivano-Frankivsk, Khemlnitsky, Kyiv, Lutsk, Lviv, Rivne, Ternopil, Uzhgorod and Zhitomir regions of Ukraine. |
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| Anticipated development impact of the project |
The project will contribute to the stable functioning of a modern distribution, warehousing and logistics services provider in Ukraine in difficult financial market conditions. Access to quality distribution and logistics services lowers overhead costs for both suppliers and retailers of FMCG. This is especially valuable now, when market pressures result in rapid growth of FMCG prices and the on-going financial crisis is impacting disposable incomes of Ukrainian consumers.
In addition, through helping an efficient and competitive Ukrainian FMCG distribution company withstand the crisis, the Project will preserve approximately 2,300 jobs, as well as help retain and expand the sector expertise and know-how, which Savservice has been accumulating for over 15 years. |
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| IFC's expected development contribution |
| By providing long-term debt financing otherwise not available for the company, IFC would support a strong, viable Ukrainian FMCG supplier in the current difficult environment. This is important in the context of IFC’s strategic efforts to help Ukraine formulate a crisis response and prevent disruptions in the functioning of essential distribution systems which, if happen, could further worsen the impact of the crisis on the living standards in the country. |
| Environmental and social issues - Category B |
| This is a category B project according to IFC’s environmental and social review procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS) disclosed through IFC’s external website. |
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| For inquiries about the project, contact: |
Urfan Guliev, CEO
27, Krasnova Street, Kyiv, 03115, Ukraine
Tel: 38 044 452-9886
e-mail: guliev.u@asnova.com |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
| 27, Krasnova Street, Kyiv, 03115, Ukraine |
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