CT I-Horizon

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	561188
Company name	Horizon FuelCell
Country	China
Sector	Other (For Non-Investment Projects)
Environmental category	B
Department	Environment & Social Development
Status	Non Fee Services

Date SPI disclosed	June 15, 2009
Projected board date	July 20, 2009

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

On behalf of the Global Environment Facility’s Earth Fund, IFC is considering an investment in Horizon Fuel Cell Technologies Pte. Ltd., a Singapore-domiciled fuel cell technology company with operations in Shanghai, China. Horizon has developed Polymer Electrolyte Membrane (PEM) fuel cell solutions for small applications and is now seeking to expand its product offerings to medium- and larger-scale applications. The proposed investment will support Horizon’s capital expenditure, R&D, IP acquisition, and working capital needs during the 2008-10 period (the “Project”), with a total estimated cost of $9.8 million.

Horizon’s fuel cell technology solutions provide a cost-effective alternative to environmentally unsound lead acid battery and fossil fuel genset technologies currently used across the world. In each market opportunity, Horizon will exploit its ability to develop specialized solutions at costs that are significantly below those of competitors in the fuel cell industry. The Project aims to tap the low-cost of R&D and manufacturing in China to meet demand for its fuel cell solutions globally.

Anticipated development impact of the project

The Project will support the expansion of Horizon’s operations in China and allow it to launch medium- and larger-scale fuel cell applications. The Project is expected to create direct employment in China, and generate tax revenues and customs duties for the government.

The Project will promote the transfer of technological know-how and manufacturing skills to China. Horizon’s fuel cell technology will provide a cleaner alternative to existing lead acid battery and genset technologies that are often polluting to the environment. If the Company scales up successfully, larger fuel cell applications may have an even greater impact on the environment.

IFC's expected development contribution

IFC's role in this transaction will be to: (i) provide equity funding for a company with an innovative technology fostering sustainable energy use; (ii) support for Horizon’s operations in China and entry into new developing markets; and (iii) facilitate the Company's efforts to go public in a few years.

Environmental and social issues - Category B

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which 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

Since the manufacturing process involves only the assembly of small components; and Horizon’s facilities (including those of its contract manufacturers) are located in the Government designated industrial areas, issues addressed in Performance Standards 4, 5, 6, 7 and 8 are not expected to be encountered during the course of the project. E & S Categorization Rationale:

Specific key environmental and social issues associated with this project are:

- Corporate level environmental and social management and management system encompassing the Company’s own activities as well as the suppliers and contract manufacturers;
- Labor health and safety issues – especially with the contract manufacturers; and
- Management of solid waste arising from the process.

Details are available in the Environmental and Social Review Summary (ESRS), which is available for public review at the IFC Infoshop website http://www.ifc.org/projects.

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