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| Kronostar III |
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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 | 26792 |
| Company name | OOO Kronostar |
| Country | Russian Federation |
| Sector | Industrial & Consumer Products |
| Environmental category | B |
| Department | Global Manufacturing & Services |
| Status | Active |
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| Date SPI disclosed | May 21, 2008 |
| Projected board date | June 20, 2008 |
| Previous Events | Invested: August 26, 2009
Signed: December 4, 2008
Approved: September 16, 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 |
Krono Holding (the sponsor) through its Russian subsidiary, Kronostar, has implemented one of the largest downstream investments in the Russian forest sector of the past couple of decades. This Euro 350 million composite panel facility was implemented in phases starting in 2003. Earlier phases of the project were funded in part by IFC.
The project currently under consideration involves:
- the financing of a project cost overrun, caused in part by an expanded environmental protection scope (over and above the original requirements) of project phases I and II, and
- the financing of production capacity expansion.
Total project cost is estimated at Euro 120 million of which Euro 100 million represents overruns and expanded scope of the project which has already been financed with a combination of equity, subordinated loans from the sponsor and short term debt from Russian banks. A resin plant may be constructed at some time in the future, though that is not included within the cost of the currently considered project. |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Krono Holding AG which is a private company headquartered in Luzern, Switzerland, and is the third largest European wood panel producer. Mr. Ernst Kaindl and his family are the largest shareholders of Krono Holding. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at Euro 120 million. IFC would provide up to an A loan of $30 million and a B loan of $30 million (total $60 million) in a financing package. |
| Location of project and description of site |
| Kronostar is located near Sharja in Kostroma Oblast, on 119.5 hectares of land with access to roads and a connection to Trans-Siberian railway. The project investment will be made primarily in the Kostroma Oblast’s rural area. |
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| Anticipated development impact of the project |
| The project is an internationally competitive panel board manufacturer based on sustainably managed forests. It transforms low-cost wood waste into high-quality MDF, particleboard and value-added products such as melamine-faced chipboard (MFC). Kronostar’s location in the middle of abundant forest resources allows it to use wood waste from local saw mills, plywood mills and harvesting waste in the forests. It combines these with low-cost energy, glue, and labor to be one of the world’s most competitive composite wood panel producers. In addition composite wood panels of comparable quality to that produced by the project is currently imported, thus giving the company 60 percent lower transport costs than its foreign competitors. |
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| IFC's expected development contribution |
| IFC’s role in the project is manifold. IFC will act as a catalyst for foreign investment and private sector participation in Kostroma, and to help the sponsor gain access to long-term financing. The role of IFC’s involvement is also to ensure that the projects benefits trickle down in a sustainable manner to the community. |
| Environmental and social issues - Category B |
The main potential adverse social and environmental aspects of projects such as this are management of social and environmental issues, labor and working conditions, emissions to air and water, formaldehyde “off-gassing” from product and sustainability of wood supply. These are all issues which are limited in scale, reversible and may be managed by readily available techniques.
This is a category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts that may result have been or are being avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. |
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| For inquiries about the project, contact: |
Company Representative
Krono Holding AG
Haldenstrasse 12
CH-6006 Lucerne
Switzerland
Phone : 0041-41-419-03-02,
Fax : 0041-41-419-03-25 |
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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 |
The environmental documents are available in the company’s offices and the Sharja Municipal Building at the following respective addresses:
KronoStar GMBH
Zentraljnaja Strasse 4
157531 Wetluschskij
Sharja, Kostroma
The Russian Federation
- Sharjah Municipal Building
Sharja, Kostroma
The Russian Federation |
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