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| This Summary of Project Information 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. |
Summary of Project Information (SPI) |
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| Project number | 10624 |
| Project name | Lebanese Leasing Company Credit Line 3 |
| Country | Lebanon |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | Lebanese Leasing Company S.A.L. |
| Environmental category | FI |
| Date SPI disclosed | October 19, 2000 |
| Projected board date | December 20, 2000 |
| Status | Completed |
| Previous Events | Invested: May 16, 2001
Signed: March 23, 2001
Approved: December 12, 2000 |
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| Project sponsor and major shareholders of project company |
The project sponsor is Lebanese Leasing Company (LLC, the Company), an IFC investee company since 1995 and the first leasing company established in Lebanon. The main shareholders are:
Fransabank was established in 1921. Its main shareholder is the Kassar Group (70%), Crédit Agricole (France, 6%), and DEG (5%). As of June 30, 2000, total assets and total equity amounted to US$2.7 billion and US$216 million respectively.
Ucabail SA is the holding company of Crédit Agricole Indosuez's leasing activities. Ucabail has eight specialized subsidiaries in France: Unimat and Unicar (equipment leasing), Unicomi, Finamur, Agritel (real estate leasing), Etica (computer leasing). Currently, Ucabail accounts for about 12% of the leasing market and ranks third in the leasing industry in France. |
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| Total project cost and proposed IFC investment |
| The total project cost is US$10 million, which will be financed by an IFC loan. IFC's investment will be structured in two tranches. Tranche 1 will be a straightforward line of credit for US$6 million and tranche 2 will be in the form of a standby facility for US$4 million. Tranche 1 will be available for draw down at the signature of the agreements whereas tranche 2 will only be available from September 30, 2001. Tranche 2 terms (mainly the spread) will be determined at the date LLC requests to draw on the facility depending on the prevailing market conditions. |
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| Location of project and description of site |
| LLC is located in Beirut. Its operations are made throughout the country. |
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| Description of company and purpose of project |
As of June 30, 2000 and since inception, LLC has provided about US$54 million of lease finance to 196 SMEs. LLC has growing revenues while maintaining a healthy portfolio as a result of prudent management policies. Today, LLC has proven to be a successful "model" leasing company providing SMEs with much needed alternative and flexible financing mechanism to traditional bank financing. In addition to obtaining medium and long term loans from its shareholders, LLC has succeeded in borrowing US$3 million from ABN AMRO, an unrelated bank. Having already utilized the first two lines of credit extended by IFC and other funding packages extended by its other shareholders and other lenders, LLC is now looking for additional funding, with the view to accessing other sources, such as the capital markets, in the future.
IFC's role: developing the Lebanese financial sector and addressing term funding needs for SMEs are a major part of IFC's strategy in Lebanon. In addition to supporting a successful institution-building initiative, the new credit line will also strengthen the long-term funding base of LLC. IFC's third credit line will help support LLC's expansion, as leasing is developing into an important source of funding for SMEs.
Development impact: LLC, the first leasing company, has been an IFC investee company since 1995. IFC's participation in the initial and second funding packages have provided the company with a base of long-term funds and has prompted local and foreign financial institutions to finance the company. LLC has proven to be a successful company providing SMEs with flexible financing mechanism. Having already utilized the second credit line of IFC, LLC is looking for additional funding, with the view to accessing the capital markets for future needs.
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| Environmental and social issues - Category FI |
This is a Financial Intermediary (FI) Type 2 project according to IFC's environmental and social review procedure. LLC must require all subprojects to be carried out and operated in compliance with the applicable environmental, health and safety (EH&S) requirements of Lebanon. In addition, subprojects whose total cost is less than US$500,000 must be consistent with IFC's Microfinance Exclusion List. Subprojects whose total cost is US$500,000 or greater must be carried out in accordance with IFC's safeguard policies, be consistent with IFC's Exclusion List, and meet the host country requirements. LLC must obtain IFC clearance prior to making any loan or investment with IFC funds in any Category A subproject and such a subproject must meet the applicable EH&S guidelines and safeguard policies of the World bank Group. LLC must participate in environmental training, develop an environmental management system, and provide an annual environmental performance report.
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| To contact the project company, please write to: |
Mr. Joseph Dakkak
Central Manager
Phone: 961-1-738 610
Fax: 961-1-738 614 |
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