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| PMI II |
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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 | 28461 |
| Company name | Theodore Alexander HCM Ltd. |
| Country | Vietnam |
| Sector | Industrial & Consumer Products |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Pending Disbursement |
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| Date SPI disclosed | August 20, 2009 |
| Projected board date | September 21, 2009 |
| Previous Events | Signed: September 30, 2009
Approved: September 24, 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 |
Paul Maitland International, Inc. (‘PMI’ or the ‘Company’) is an existing IFC client and a maker of high-end European style furniture with manufacturing operations based in Ho Chi Minh City, Vietnam. The Company was established in 1996 in Vanuatu and was re-domiciled to the British Virgin Islands (‘BVI’) in 1998. The Company's business model involves a process whereby all products are manufactured in Theodore Alexander HCM Ltd., (‘TA’), its 100%-owned Vietnam subsidiary, for sale to global dealers through PMI’s sales and distribution subsidiaries. The Company is export-driven and generates all its revenues in U.S. dollars.
Project Description:
The Project consists of 1) the refinancing of TA’s permanent working capital, 2) the development of the Company’s U.S. distribution program, 3) refinancing short term debt, and 4) supporting TA’s FY2010 – 2011 capital expenditures program. Total project cost is estimated to be $20 million and IFC proposes providing an A loan of up to $10 million. The remainder of the project cost is expected to be funded by a local bank ($4 million) and internally generated cashflow ($6 million).
In March 2006, IFC provided an $8 million A loan primarily to support TA’s permanent working capital needs. Currently, only $2.4 million of the original A loan remains outstanding. The loan is planned to be completely repaid by December 2010. |
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| Project sponsor and major shareholders of project company |
Navis Capital Partners (‘Navis’), a Kuala Lumpur-based Asian private equity firm and management consultancy, has been the controlling shareholder of PMI since March 2008 when the Company’s founder Mr. Paul Maitland-Smith sold much of his shares and ceded control of the Company to Navis. PMI, incorporated in the BVI, holds 100% of the proposed borrower Theodore Alexander HCM Ltd., incorporated in Vietnam.
Navis was founded in 1998 and is focused on private equity investments in Asia, particularly South and Southeast Asia. The firm manages several private equity funds whose limited partners include a number of well-known U.S., European, Middle Eastern, and Asian commercial and investment banks, pension funds, insurance companies, corporations, as well as a number of high net worth individuals and families. The firm contributes both capital and management expertise to its equity investments with the objective of directing strategic, operational and financial improvements. Currently, Navis manages approximately US$2 billion in capital commitments. |
| Total project cost and amount and nature of IFC's investment |
| The total Project Cost is estimated at $20 million. The proposed IFC investment is an A loan of up to $10 million for IFC’s own account. |
| Location of project and description of site |
| The Project is located at the site of Theodore Alexander HCM Ltd. (‘TA’), PMI’s main manufacturing company in Vietnam. TA is located at Linh Trung II Export Processing Zone, Block 50 – 57, Street 1, Binh Chieu Ward, Thu Duc District, Ho Chi Minh City, Vietnam. The Linh Trung II Export Processing Zone is a special industrial zone in Ho Chi Minh City where many manufacturing companies are located. |
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| Anticipated development impact of the project |
Increase in Recruitment and Development of Local Executive Staff:
The Project will support a client actively engaged in the recruitment, development, and retention of talented local executives to replace expatriate executive staff where appropriate. The number of expatriate staff has already been halved from November 2007 to the present in an effort to control costs and develop local talent instead.
Improved Environmental and Social Performance:
The Project will support PMI’s attainment of Chain of Custody certification for the sourcing of its wood supply. In addition, IFC’s proposed investment will encourage the Company to explore the possibility of cleaner production opportunities, including raw material conversion efficiency and energy generation from wood dust.
Increased Linkages with the Local Economy:
Almost 80% of the goods purchased by PMI from its top 10 suppliers is from local Vietnamese companies. The proposed IFC investment will continue to assist the Company in supporting local suppliers and the local economy.
Demonstration Effect:
The proposed IFC investment will support a key industry in the region facing a challenging market situation, sending a positive message to the market. Furthermore, by investing in an operationally restructured entity, a very important signal is being sent to the market that an appropriate response to financial challenges is to address the underlying operational causes and dealing with those issues directly as PMI has done through professionalizing management and shedding excess non-performing assets, is worth investors’ support. |
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| IFC's expected development contribution |
Mobilization of Long-term Finance:
Vietnam’s financial markets are still developing, and long-term financing is not readily available from domestic lenders or if so, at relatively high spreads. IFC will provide a long term loan with maturity of up to 7 years, which will be important in order to free the Company’s management from spending time on short term funding renewals and allow them to focus more fully on their business.
Improved Environmental Standards:
IFC will assist the Company in continuing to improve its environmental, social, health and safety performance by providing strategic guidance captured in a time-bound Action Plan. Chain of custody certification for wood supply and occupational health and safety upgrades will be emphasized. |
| Environmental and social issues - Category B |
| This is a Category B project according to IFC’s Environmental and Social Review Procedures. A limited number of environmental and social impacts would result from the project, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. |
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| For inquiries about the project, contact: |
Name: Mr. Harvey Dondero
Title: Chief Executive Officer
Address: Theodore Alexander HCM Ltd., Linh Trung II EPZ,
Block 50 – 57, Street 1, Binh Chieu Ward, Thu Duc District,
Ho Chi Minh City, Vietnam
Tel. Number: (84) 8 3729 2112
Fax: (84) 8 3729 4177
E-mail: hdondero@theodorealexander.com
Website: www.theodorealexander.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: (1) 202-473-3800
Fax: (1) 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
| Environmental and social information pertaining to the Project will be available for access by the locally affected communities outside the project facilities in and around Ho Chi Minh City. It will also be posted near the main entrance of Theodore Alexander HCM Ltd. and disclosure will also be made at a publicly accessible place in Ho Chi Minh City. |
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