ADMIC

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	25845
Company name	ADMIC, S.A.L.
Country	Lebanon
Sector	Wholesale and Retail Trade
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	April 9, 2007
Projected board date	May 14, 2007
Previous Events	Invested: October 22, 2007 Signed: June 15, 2007 Approved: June 4, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

ADMIC, Lebanon’s leading retailer, has been negatively affected by the repercussions of the war in Lebanon and the subsequent political conflict. In that regard, ADMIC has requested up to $20 million IFC loan and equity/quasi equity financing to:

- complete its second BHV department store; and
- replace its expensive short term debt with more appropriate long term funding to enable its expansion.

Anticipated development impact of the project

- Facilitating continued and additional employment:

The project will bring ADMIC to the stable operational level that it experienced before the war, thereby allowing it to continue employing its staff of over 1,000 during this disruptive political and economic period. Moreover, the project will create additional direct employment with the opening of the second BHV store.

- Upgrading business practices:

The support of ADMIC’s retail operations during difficult times will have a catalytic effect on developing and improving the quality of other retailers as well as local suppliers and producers. The example set by ADMIC will provide confidence to both retailers and shoppers, thereby facilitating a recovery of normal retail activity which has been hampered by recent political events in Lebanon.

- Providing consumers with a wide range of good quality merchandise at affordable prices:

ADMIC will continue to provide customers with increased selection of high quality goods. The increased selection will enhance consumers’ ability to use ADMIC stores as a “one-stop shop” which will result in time savings and better customer satisfaction.

- Promoting SME and private sector development:

ADMIC’s operations positively impact a wide range of suppliers to and sub-contractors within their business. The project will facilitate expansion and improvement of supplier quality standards through ADMIC’s own high product quality requirements.

IFC's expected development contribution

The proposed IFC financing will support the leading retailer of Lebanon that has been negatively affected by the repercussions of the 2006 war and the following political conflict. IFC’s long-term financing, which is not currently available in Lebanon, will enable the company to complete its second BHV department store and reduce its short-term funding. Moreover, IFC’s financing will set an example for other foreign investors who have become less willing to invest in Lebanon due to the political risk. IFC’s involvement will also form stretch environmental and social performance targets for ADMIC’s operations.

Environmental and social issues - Category B

The project proposed for IFC’s support is an existing retailing operation with urban locations. Future developments are also likely to be brownfield sites because Admic seeks to develop stores close to established residential areas of the city, meeting market demand for neighborhood stores.

The key environmental and social issues in ongoing operations are environmental and social management, terms of employment and provision of safe working conditions, management of solid waste and emissions to air and water, energy efficiency and life and fire safety. New sites must be developed in accordance with Lebanese and IFC land acquisition provisions, environmental assessment and planning requirements, and construction activities should provide for chance finds of items of cultural heritage.

While all Performance Standards are applicable to this investment, the environmental and social impacts described must be managed in a manner consistent with the following Performance Standards:

- PS1: Social and Environmental Assessment and Management System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health Safety and Security;
- PS5: Land Acquisition and Involuntary Resettlement; and
- PS8: Cultural Heritage.

As a result of its due diligence, IFC has concluded that the potential adverse environmental and social impacts presented by the project are few in number, site-specific and have been or can be readily addressed through mitigation measures. It is therefore concluded that this is a Social and Environmental Category B project.

Social and environmental mitigated measures agreed with the project sponsor are summarized in the Environmental and Social Review Summary (ESRS) and Environmental Action Plan.

Environmental documents are available at the following location:

Citymall, 14 Dora Highway, Bauchrieh, Naher El Mott, Lebanon.

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