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| Grupo Monge |
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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 | 26968 |
| Company name | Grupo M Holding S.A. |
| Country | Central America Region |
| Sector | Wholesale and Retail Trade |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Pending Approval |
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| Date SPI disclosed | March 27, 2008 |
| Projected board date | April 28, 2008 |
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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 |
| Grupo Monge (the Group, or the company) is a leading, family-owned retailer of consumer electronics, household appliances and furniture in Central America, serving mainly low and middle-low income consumers. The company began its retail operations in Costa Rica in 1970 and has since expanded its retail operations to 325 stores in five Regional countries including Costa Rica, Nicaragua, Honduras, Guatemala and El Salvador. The company’s activities also include a wholesaling operation in Costa Rica and a consumer finance arm that complements the retailing business by providing customers with financing for in-store purchases. The company is undertaking an investment program estimated to cost about $425 million to support the expansion of the company’s existing operations and for debt refinancing. |
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| Project sponsor and major shareholders of project company |
| The project is sponsored by the second generation of the Monge family, who fully own and manage the company: Gastón Monge Chevez, Carlos Federico Monge Chevez, José Alfredo Monge Chevez and Maria José Monge Chevez (collectively referred to as the “sponsors”). The sponsors indirectly own Grupo Monge through two holding companies, Caribbean International Electronics S.A. and Altai Assets Corp, which in turn own Grupo M Holding, the company’s holding entity. |
| Total project cost and amount and nature of IFC's investment |
| The total project costs are estimated at $425 million. The proposed IFC investment would be loans of up to $50 million for IFC’s own account. |
| Location of project and description of site |
| The company is headquartered in Costa Rica. Grupo Monge operates stores in Costa Rica (180), Nicaragua (52), Honduras (36), Guatemala (10) and El Salvador (47). This project will result in approximately 175 additional stores mainly across mid to small rural cities in Guatemala, Honduras and El Salvador. |
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| Anticipated development impact of the project |
The project’s development impact includes:
- Expanded access to high quality products to lower-income segments of the population;
- Improved access to consumer credit for lower-income individuals, specially in Guatemala, Honduras and El Salvador;
- Increased direct employment with adequate compensation and training;
- Enhanced the benefit of modern organized retailing to an underserved market segment, which has traditionally been serviced by informal and unorganized stores; and
- Added tax revenue sources for the local governments. |
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| IFC's expected development contribution |
IFC’s expected development contributions are as follows:
- IFC will provide long-term debt with adequate tenor and grace period to support the growth strategy of the company and support the debt restructuring exercise;
- IFC will also provide advice on environmental and social matters, particularly regarding Life, Fire and Safety, in order to help align the company’s practices with international best practice standards. |
| 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, 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 mitigated by adhering to generally recognized performance standards, guidelines or design criteria.
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, life and fire safety, security management, and wood supply chain. 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 Systems;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement;
- PS4: Community Health, Safety and Security;
- PS5: Land Acquisition and Involuntary Resettlement; and
- PS6: Biodiversity Conservation and Sustainable Natural Resource Management. |
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| For inquiries about the project, contact: |
Mr. Jorge Chacon
Chief Financial Officer
Grupo M Holding S.A.
200 Metros sur de la Antigua Aduana Las Canas
El Cacique
Apartado 1131-4050 Alajuela
Costa Rica
Phone: 506 437 4100
Fax: 506 440 4707 |
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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 |
Project documentation will be made available at the following location:
Grupo M Holding S.A.
200 Metros sur de la Antigua Aduana Las Canas
El Cacique
Apartado 1131-4050 Alajuela
Costa Rica |
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