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| ALH |
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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 | 25519 |
| Company name | GSHR Holdings Limited |
| Country | Croatia |
| Sector | Accommodation & Tourism Services |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Active |
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| Date SPI disclosed | January 17, 2007 |
| Projected board date | February 28, 2007 |
| Previous Events | Invested: October 11, 2007
Signed: June 14, 2007
Approved: March 15, 2007 |
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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 |
| Adriatic Luxury Hotels (ALH or the company), one of the leading tourism companies in Croatia, owns and operates 809 rooms spread across five hotels on the Adriatic coast. ALH is part of the GS Hotels and Resorts (or GSHR) portfolio of hotel companies has been active in Croatia since 1995. Its long-term strategy involves positioning itself as a leading player in the luxury tourism segment in Croatia and it plans to achieve this by acquiring and building new properties in key locations. The project involves the restructuring and the development of ALH Group (ALH Group), a group specialized in the development, acquisition and management of hospitality properties in the Region, focusing on, but not limited to, Croatia and other countries of the former Yugoslavia |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Mr. Goran Strok. Mr. Strok established GS Hotels and Resorts in 1995 and is currently the sole owner of ALH. Each hotel is a separate company and is majority-owned (directly or indirectly, through ALH) by Mr. Strok, in his individual capacity. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at approximately €330 million. The proposed IFC investment is a €27.5 million ‘A’ loan for IFC’s own account and an equity investment of €12.0 million. |
| Location of project and description of site |
| ALH owns and operates five hotels on the Adriatic coast. One of the hotels is located in the northern part of the Adriatic coast (in the city of Rijeka) and the other four in the southern part, close to the old city of Dubrovnik. Dubrovnik is the main port and tourist center of the southern Croatian coast. It is one of the famous historical cities of Europe and the jewel in Croatia’s tourism crown, with its unique old city, designated as a world cultural heritage site and under UNESCO protection. Dubrovnik has a population of approximately 50,000 and an economy based on tourism and seafaring. |
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| Anticipated development impact of the project |
| The project will help to re-build the damaged tourism infrastructure, restore tourism numbers and help re-establish tourism as an important source of foreign exchange for Croatia. The business model fits very well with the government strategy with a focus on rebuilding existing assets damaged by the war. The project will benefit from good locations with views of the Adriatic Sea and close proximity to Old Town Dubrovnik. The project will also establish strong direct and indirect linkages to local and regional economies both in the development phase (construction services, building supplies) and during on-going operations (F&B and other operating supplies). |
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| IFC's expected development contribution |
IFC’s equity and loan investment is a part of the comprehensive financial package aimed at helping the company rebuild hotel infrastructure and upgrade the quality of rooms being offered in Croatia and also helping a local company to significantly improve its financial situation by injecting much needed equity and refinancing its existing debt. IFC’s equity and loan investment in the company will also help encourage the company’s biggest lender to reschedule its loan to the company on terms similar to those offered by IFC.
Overall, by its investment, IFC expects to introduce the best corporate governance practices and help this owner controlled company position transform and apply its experience to neighboring countries. |
| Environmental and social issues - Category B |
This project is reviewed as a Direct Investment according to IFC’s Environmental and Social Review Procedure, and the following Performance Standards (PS) are found to be relevant:
- PS1: Social and Environmental Assessment and Management Systems with respect to the company’s management of its environmental, health and safety performance in the construction and operation of hotels, and maintaining compliance with national and local permitting requirements.
- PS2: Labor and Working Conditions with regard to fair and safe working conditions and ethnic equality.
- PS3: Pollution Prevention and Abatement with regard to sustainable water supply and usage, wastewater treatment and discharge, solid waste sorting and disposal, and air emissions from building heating and cooling.
- PS4: Community Health, Safety and Security in respect of life and fire safety.
- PS8: Cultural Heritage as some of the hotels and properties are located in historic and culturally important sites.
The appropriateness of a B categorization has been confirmed during visits to all ALH’s existing hotels in Croatia.
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| For inquiries about the project, contact: |
Marino Cehic
GRUPA JADRANSKI LUKSUZNI HOTELI d.o.o.
Dolac 4
51 000 Rijeka
Croatia
E-mail: Marino.cehic@alh.hr |
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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 |
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