Unitim Holdings A.S

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	25832
Company name	Unitim Holdings A.S
Country	Turkey
Sector	Textiles, Apparel & Leather
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	May 7, 2007
Projected board date	June 7, 2007
Previous Events	Invested: June 27, 2007 Signed: June 21, 2007 Approved: June 19, 2007

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Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The project is the multi-year retail and textile manufacturing expansion of The Unitim Group (Unitim), a leading garment manufacturer and retailing company in Turkey. The project includes:

- the expansion of the company’s existing retail networks;
- the expansion of the company’s textile production base to Egypt and;
- the refinancing of the company’s short-term debt.

The financing will consist of an A Loan of $20 million and a C Loan of $10 million.

The project will contribute to the diversification of the retail sector in Turkey and support the establishment of strong Turkish companies in the sector and the region.

Anticipated development impact of the project

The project will transfer new manufacturing technologies and management and production techniques to Egypt during the course of the manufacturing expansion. Unitim’s garment production unit has pioneered the application of the auto industry’s lean production technique to the textile industry in Turkey and the expansion will allow the company to export this technology to Egypt. This knowledge transfer will not only add to the modernization of the manufacturing industry but also lead to the increased skill development of Egyptian managers and workers.

A diverse and modern retail sector attracts commercial investment by creating dynamic commercial centers. The retail expansion will raise the standard of the retail experience in Turkey, provide local consumers with greater choice of higher quality goods and increase competition in the retailing sector by setting new international standards for service. The expanded franchise network will give local entrepreneurs the opportunity to further develop and grow their own businesses within the framework of a larger corporate structure, introduce franchise partners to innovative marketing and brand management techniques, and allow them to participate in the overall profitability of the brands.

IFC's expected development contribution

IFC's additionality and role is to support local entrepreneurs in local markets who are growing and expanding their businesses. In addition to this general role, IFC will also play several other roles in the transaction.

- The transaction will also provide competitive long term financing that is currently unavailable to the company
- Provide critical financial assistance and operational guidance as the company seeks to restructure its balance sheet, improve its profitability and refine its corporate structure.
- IFC’s Environmental Department will ensure that the project’s health, fire, safety and employee labour standards meet international best practice guidelines.

Finally the partnership will demonstrate to the market the viability of financing strong, local players in their regional expansion projects.

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 social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Environmental, social , health and safety issues associated with this project include:

- Air emissions and effluent disposal;
- Site material storage and handling;
- Solid and hazardous waste management and disposal;
- Housekeeping and Occupational health and safety;
- Corporate capacity in environmental management;
- Sustainable community relations and intiatives and
- Labor and working conditions.

Performance Standards applicable to all plants are:

- PS1: Social and Environmental Assessment and Management;
- PS 2: Labor and Working Conditions;
- PS 3: Pollution Prevention and Abatement; and
- PS 4: Community Health, Safety and Security.

For the existing facilities and in regard to PS5, all plant sites are located either in industrial areas, in semi rural well established agricultural areas or close to urban areas. No people were displaced or lost economic livelihoods when the plants were established. All lands are clearly modified habitats, with no known critical habitats present. No indigenous peoples are known to be present, and no cultural heritage sites have been identified close to any of the plants.

The relevant PSs have been provided to and discussed with the client as have the relevant IFC Guidelines (i.e. Environmental, Health and Safety (EHS) guidelines: General EHS guidelines, draft August 2006; Environmental Health and Safety guidelines for Textile manufacturing; draft August 2006 ).

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