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| Bostavan |
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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 | 26297 |
| Company name | Bostavan Wineries, Ltd. |
| Country | Moldova |
| Sector | Food & Beverages |
| Environmental category | B |
| Department | Agribusiness |
| Status | Active |
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| Date SPI disclosed | November 2, 2007 |
| Projected board date | December 3, 2007 |
| Previous Events | Invested: June 6, 2008
Signed: March 24, 2008
Approved: February 7, 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 |
Bostovan Wineries Limited (BWL or the company) is a leading Moldovan wine producer headquartered in Chisinau, Moldova. The company’s main business operation is production of wines in Moldova and Romania.
The company’s Moldovan operations suffered significantly from the ban in March 2006 on exports to Russia, which accounted for 75-80% of the company’ sales. The company is undertaking an investment program to upgrade and expand its wineries as part of its strategic plans to diversify its markets and reduce reliance on the Russian market. |
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| Project sponsor and major shareholders of project company |
| The company’s operation was established by Mr. Victor Bostan in 2002. Mr. Bostan, Chairman and CEO of the company, is a Moldovan national with 23 years experience in the CIS wine market and owns 81.25% shareholding in the company. Detroit Investments, an existing IFC client, holds 18.75% stake. |
| Total project cost and amount and nature of IFC's investment |
| The total project cost is estimated at $22 million. The proposed IFC investment is composed of $5 million in equity or quasi equity investment in BWL and a $5 million A loan to SRL Vinaria Bostavan, a 100% subsidiary of BWL. The total IFC investment is $ 10 million. |
| Location of project and description of site |
| The company is headquartered in Chisinau, Moldova and has wineries and vineyards in Etulia, Onesti and Bardar in Moldova. The location of the project will in rural areas of Moldova. |
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| Anticipated development impact of the project |
The project is expected to have the following development impacts:
- Rehabilitating key production assets in Moldova’s wine industry, a major contributor to the country’s GDP.
- Expanding linkages to farmers and other input suppliers and SMEs (transporters, distributors, retailers).
- Create jobs directly and indirectly and improve living standards of employees within the companies and along the supply chain.
- Enhance product safety and affordability by implementing international best practice and certifications.
- Contribute to Government revenues through additional income and excise taxes |
| IFC's expected development contribution |
IFC’s role includes:
- Supporting the Moldovan’s government’s efforts to restructure a key industry and encouraging FDI sector development.
- Providing long-term (5-8 years) financing, which is not easily available to the company from local financial institutions.
- Stamp of approval – IFC’s participation will provide confidence to potential lenders and investors in the wine sector in Moldova. |
| 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. IFC’s environmental and social appraisal for the project consisted of document review, company interviews, visits to the project sites, and meetings with members of the local communities.
Environmental and social issues associated with this project include:
- environmental, health and safety management systems;
- labor and working conditions;
- land acquisition;
- cultivation and harvesting practices and potential environmental and occupational health and safety impacts arising from use of chemical inputs and pesticides;
- occupational health and safety management;
- management of hazardous materials and wastes;
- sustainability and quality of potable water;
- air emissions from production processes;
- use, treatment and discharge of process wastewater;
- sustainable management of solid waste.
The company has presented plans to address these issues to ensure that the proposed project will comply with all relevant environmental and social requirements of the local laws and of World Bank/IFC policies, performance standards and guidelines. Specific information about how potential environmental and social impacts will be addressed by Bostavan (including a detailed action plan) is set out in the Environmental and Social Review Summary (ESRS) disclosed in the World Bank Infoshop and locally in Chisinau. |
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| For inquiries about the project, contact: |
Mr. Victor Bostan, Chairman and CEO
Bostavan Wineries Ltd.
202, Stefan cel Mare Bvd
MD-2004, Chisinau, Moldova
Telephone: 373-22-745838
Fax: 373-22-754451
The environmental documents will be made available at the above location. |
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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 |
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