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| Xiwang Sugar Holdings Company Limited |
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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 | 28184 |
| Company name | Xiwang Sugar Holdings Company Limited |
| Country |
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| Sector | Grain Processing (Milling, Starch, Flour, Malt) |
| Environmental category | B |
| Department | Reg Manufact, Agri & Services, ASIA |
| Status | Active |
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| Date SPI disclosed | November 23, 2009 |
| Projected board date | December 24, 2009 |
| Previous Events | Invested: June 17, 2010
Signed: March 2, 2010
Approved: January 19, 2010 |
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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 |
Xiwang Sugar Holdings Company Limited (“Xiwang Sugar” or the “Company”) is a Hong Kong listed company (stock code 2088.hk) based in Shandong Province of China. Xiwang is one of the largest cornstarch-processors in China, with 1.5 million tons of corn processing capacity. It is China’s largest producer of crystalline glucose with 800,000 tons of capacity. In addition to glucose and other starch sugars, it also produces corn co-products including corn germ, corn gluten meal, gluten feed, etc.
Xiwang was established in 1986 as a cooperative enterprise in Xiwang Village and started corn starch processing in 1989, later moving downstream to produce corn-based glucose. Xiwang was reorganized into a limited liability company in 2001, and after further restructuring was listed on the Main Board of the Hong Kong Stock Exchange in 2005.
To further develop its leading position in the corn processing industry and improve its product mix with more value added products, the Company has been building or upgrading capacity for crystalline fructose, pharmaceutical-standard glucose and sodium gluconate. The Company is also building additional corn storage capacity to hedge against price increases (collectively the “Project”). |
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| Project sponsor and major shareholders of project company |
The project sponsor is Mr. Wang Yong, a PRC national who holds a beneficial interest of 37.9% in the Company. Mr. Wang Yong, aged 59, is the founder and Chairman of the Company and has worked in the corn processing sector for 25 years. Mr. Wang served as a Representative of Shandong Province’s to the 10th People’s Congress from 2002-2007, and is currently appointed to the 10th People’s Congress (2008-2013).
An additional 25.1% stake of the Company is beneficially held by a group of 27 individuals, most of whom are the current or former senior management of the Company. The remaining 37% stake is floated on the Hong Kong stock exchange. |
| Total project cost and amount and nature of IFC's investment |
| The total Project cost is estimated at $62 million. The proposed IFC investment is a $20-25 million, primarily in the form of long-term debt. IFC also expects the Company to mobilize at least $20 million of co-financing. |
| Location of project and description of site |
| The Company is headquartered in Zouping County, Binzhou Prefecture in Shandong Province. The Project is located in Xiwang’s production compound in the rural area of Zouping country, about 90 km from the provincial capital Jinan. The Project area has now been transformed into a manufacturing zone, with good access to infrastructure including road and rail links. |
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| Anticipated development impact of the project |
Employment. The Company currently employs 2,700 people in several production lines and the Project is expected to create an additional 300 jobs.
Support to SMEs. Xiwang’s operations support a large network of SMEs that provide goods and services, including transportation entrepreneurs and corn purchasing agents, and distribute Xiwang’s products to small end users.
Farmers Reached. The Company purchases about 1.1 million tonnes of corn. This is estimated to indirectly reach up to 400,000 farmers, providing an essential safety net for their livelihoods.
Technology and Food Safety. Through its R&D activities, the Company is making a technical contribution to the development of the starch/glucose sector in China. The Company’s high product quality will make a contribution to strengthening food and pharmaceutical standards and safety in China.
Contribution to Public Infrastructure. Xiwang has partnered with the local government to build new waste water facility to treat the effluent of Xiwang Group, and will participate in other such initiatives. |
| IFC's expected development contribution |
IFC is positioned to play a unique role in financing this Project:
Long-Term Financing/Balance Sheet Restructuring.
IFC can play a key role in refinancing a portion of the Company’s short term loans and in mobilizing other long-term lenders both in Hong Kong and onshore.
Stamp of Approval to Company and the Corn-processing Sector in China:
IFC’s financing will act as a strong signal to the capital markets and provide confidence for potential investors and customers.
Potential Advisory Involvement.
IFC will explore opportunities to work with the Company to strengthen their operational performance through a potential clean production audit at the Company and its related power plant. IFC may also be able to work with the Company to strengthen the SMEs in the supply chain. |
| Environmental and social issues - Category B |
| This is a Category B project according to IFC’s Environmental and Social Review Procedures. A limited number of environmental and social impacts would result from the project, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. For further details, please access the Environmental and Social Review Summary via this link. |
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| For inquiries about the project, contact: |
John Chung
Chief Financial Officer
Xiwang Sugar Holdings Co. Ltd.
Unit 1508-0, 15th Floor
Great Eagle Centre
23 harbour Road
Wanchai, Hong Kong
(852(3188-4518 |
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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 |
| A Chinese-language copy of the Summary and associated Action Plan will be made available at the main entrance of Xiwang Industrial Area, Zouping County, Shandong Province, PRC. An announcement informing the public of its availability will also be placed in a local newspaper. Project details can also be obtained through: John Chung Chief Financial Officer Xiwang Sugar Holdings Co. Ltd. Unit 1508-0, 15th Floor Great Eagle Centre 23 Harbour Road Wanchai, Hong Kong (852(3188-4518 Sun Xinhu Executive Director Xiwang Sugar Holdings Co. Ltd. 8/F, Xiwang Group Building Xiwang Industrial Area Zouping County, Shandong Province, PRC |
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