Atateks

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	26376
Company name	Atateks Tekstil Isletmeleri Sanayi ve Ticaret, A.S.
Country	Turkey
Sector	Textiles, Apparel & Leather
Environmental category	B
Department	Global Manufacturing & Services
Status	Active

Date SPI disclosed	September 10, 2007
Projected board date	October 24, 2007
Previous Events	Invested: December 11, 2007 Signed: November 15, 2007 Approved: November 13, 2007

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

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Atateks Tekstil Isletmeleri Sanayi ve Ticaret, A.S. (Atateks or the company) is a leading Turkish manufacturer of technical yarn, knitted fabrics and seamless wear. The company is undertaking a three year investment program to:

- modernize of the company’s yarn and knitted fabrics facilities in Turkey for $10.5 million;
- establish a new seamless wear operation in Egypt for $7 million; and
- re-profile debt of up to $25 million.

Atateks’ total financial requirements in this period are currently estimated at $42.5 million.

Anticipated development impact of the project

The project will have the following positive developmental impacts:

South-South Expansion:

The project will allow Atateks to set up operations in Egypt, which is in line with IFC’s south-south strategy and the sector strategy of expanding textile manufacturing capacities in cost competitive environments. Expanding into Egypt will reduce the company’s manufacturing costs as well as help Atateks improve its overall competitiveness and become a leading regional exporter.

Employment:

The Project will create about 400 new jobs, and help ensure the sustainability of 1,800 existing jobs in Turkey and Jordan thus benefiting the local economies of three countries.

- Transfer of Technology and Know-How:

The project will necessitate the training of the company’s Egyptian workforce in some of the latest state-of-the-art textile technology.

Establishing a Positive Example of Good Labor Practices:

The project will establish a good practice example of sound, externally audited labor practices in Egypt.

IFC's expected development contribution

- Environmental, Labor, and Social Advice:

IFC’s involvement will help strengthen the company’s implementation of environmental and social best practices, especially in the area of labor management, where the company has faced challenges in terms of its Jordanian operation in the past. During the pre-appraisal, the client expressed a strong interest in working with IFC and its jointly sponsored program with the ILO, USAID and others known as “Better Work Jordan” which can help further reinforce the company’s now leading labor practices and solidify its market access to socially responsible brands and customers in Europe and the United States. IFC’s advice on best practice environmental, social and labor management systems will also be beneficial to the company for its greenfield project in Egypt.

- Country and Sector Knowledge:

Discussions between IFC and Atateks have helped the company validate their expansion plan into Egypt. The company has been especially interested in working with IFC given its global knowledge and sector expertise and hopes to build a long-term relationship where IFC can provide advice on the company’s strategy, especially outside of Turkey. Atateks has welcomed IFC’s review and its industry specialist’s suggestions to strengthen market access and improve existing operations.

Long-Term Partner:

IFC will be providing Atateks with long-term financing of up to eight years. The company is looking to partner with IFC for its ability to provide both long tenor debt and the value-added services detailed above.

Environmental and social issues - Category B

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 may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.

Key environmental, health and safety, human resources and social issues in a project in this industry sector include the following:

- Management capacity to manage environmental, health and safety, human resources and social risks and issues;
- Assessment and integrated management systems to ensure environmental, health and safety, human resources and social performance;
- Terms of employment and working conditions for local and migrant workers;
- Occupational Health and Safety;
- Effluent management;
- Monitoring and control of air emissions;
- Solid and hazardous waste management and disposal;
- Hazardous material management; and- Management of outsourcing activities.

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 System;
- PS2: Labor and Working Conditions;
- PS3: Pollution Prevention and Abatement; and
- PS4: Community Health Safety and Security.

Issues relating to PS5: Land Acquisition and Involuntary Resettlement have not been identified and are not expected. For the project in Egypt the site will be constructed on a Free Trade Zone and the company will ensure the ESIA covers the aspects covered in PS5. For existing facilities, all plants are located in industrial or urban areas.

Issues relating to PS6: Biodiversity Conservation and Sustainable Natural Resource Management; PS7: Indigenous Peoples and PS8: Cultural Heritage have not been identified at present. However these aspects will be assessed for the project in Egypt in order to determine applicability.

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