RJVC

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	25421
Company name	RJVC
Country	China
Sector	Finance & Insurance
Environmental category	FI
Department	Global Financial Markets Group
Status	Pending Disbursement

Date SPI disclosed	May 17, 2007
Projected board date	June 18, 2007
Date revised SPI disclosed	May 18, 2007
Previous Events	Signed: July 16, 2007 Approved: July 13, 2007

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

The proposed project entails an investment in a greenfield Joint Venture Company (JVC) in China. The JVC would be established for corporate restructuring investments in China.

Anticipated development impact of the project

This project will help address the NPL problem which is one of the most pressing challenges facing China. Specifically, the project will have the following development impacts:

- De-leverage debtors’ balance sheet, and put assets back to productive use;
- Help clean the balance sheets of banks, AMCs, and individual companies;
- Promote creative ways to resolve NPLs through restructuring distressed enterprises, and release the potential economic value to be generated out of these distressed assets; promote the development of corporate restructuring in China by introducing international best practices.

IFC's expected development contribution

IFC’s expected development contributions to the project are:

- Leverage IFC’s unique experience in workout and restructuring in emerging markets to support JVC’s business development and capacity building. In addition to providing advisory through IFC Board representation, IFC may also provide experienced workout staff to provide advice and training to the local team
- Contribute in establishing a high-standard corporate governance structure based on international best practices.

Environmental and social issues - Category FI

This project has provisionally been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure. IFC considers the acquisition of distressed companies, while facilitating the financial and corporate restructuring of companies, with potential for exposure to environmental and reputational risks.

During appraisal, IFC will determine the Applicable Requirements, if any, that would include a combination of the IFC FI Exclusion List and/or the applicable National Environmental and Social Laws and regulations and/or the IFC Performance Standards. IFC will also review, if required, the capacity of the JVC to manage environmental and social risks and to establish and maintain a Social & Environmental Management System (SEMS). If required, IFC will suggest Supplemental Actions to address any gaps in the SEMS. Based on the review, the project may be required to develop an, or upgrade, if necessary, any existing Social & Environmental Management System (SEMS), prior to disbursement to the satisfaction of IFC, identify responsible, qualified persons to manage and implement the SEMS, commit to implement the SEMS, to ensure that its investments/activities are in compliance with the Applicable Requirements, commit to take action to remedy any gaps in SEMS implementation on an ongoing basis and submit a periodic report to IFC as per a format to be provided by IFC.

In addition to any other requirements, the JVC may also be required to review information available in the public domain and avoid investments in sub-projects that have substantial unresolved environmental and social issues.

IFC PROJECTS