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| Concern Khlibprom |
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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 | 25668 |
| Company name | OJSC Concern Khlibprom |
| Country | Ukraine |
| Sector | Food & Beverages |
| Environmental category | B |
| Department | Agribusiness |
| Status | Active |
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| Date SPI disclosed | March 14, 2007 |
| Projected board date | April 20, 2007 |
| Previous Events | Invested: August 27, 2007
Signed: May 22, 2007
Approved: May 21, 2007 |
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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 |
Open Joint Stock Company Khlibprom (Khlibprom or the company) is one of the leading manufacturers of bread and bakery products in Ukraine. It owns and operates three flour mills, fourteen bread making plants and eighty one retail stores in Western and Central Ukraine. The proposed project is a corporate-wide expansion aimed at expanding production capacities, improving efficiencies and strengthening Khlibprom’s balance sheet. It involves:
- acquisition of additional bread making capacity;
- modernization of existing bakeries and upgrade of retail network;
- construction of a new flour mill and associated grain storage facilities; and
- refinancing short-term debt. |
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| Project sponsor and major shareholders of project company |
| The project is sponsored by the Universal Investment Group (UIG), an existing IFC client majority owned by Mr. Vitaly Antonov, a Ukrainian citizen. UIG is a diversified business group with interests in distribution of petroleum products, construction and financial services. Khlibprom is the agribusiness arm of the group headquartered in Lviv, Western Ukraine. |
| Total project cost and amount and nature of IFC's investment |
| Total project cost is estimated at $45.2 million. The IFC proposed investment is up to $30 million, consisting of an A loan of up to $20 million and a C loan of up to $10 million. |
| Location of project and description of site |
| The company is headquartered in Lviv. The proposed investment program will affect all of the production locations operated by the company. The new flour mill will be constructed in Zhovkva, in the Lviv oblast in a modern state-of-the-art facility. The existing bakery facilities to be upgraded are located in the municipalities of Lviv, Vinnitsa, Rivne, Sambir, Kalush, Bar, Gaysyn, Zhashkiv and Shpola. Electrical power supply to the production facilities is from the national grid and water supply is from municipal water systems. All facilities have access to transportation infrastructure and are located in the areas with high quality work force. |
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| Anticipated development impact of the project |
The company has a permanent staff of 4,600. Its development is expected to create additional employment of over 2,500 additional direct jobs by completion in 2010. Approximately 2,000 positions will be in the bakeries and 500 in the flour mills and retail shops.
The project will contribute to the development of the grain sector in Eastern and Western Ukraine by increasing demand for local wheat purchased from private farmers. The number of farmers supplying the company is expected to double, reaching 37 by 2010.
The company relies on a large number of small and medium enterprises (SMEs). Currently, there are about 130 SMEs that transport raw materials, distribute and sell finished products. As the company expands its throughput, the number of SMEs that benefit from the company’s activity is expected to increase by 200 by 2010. |
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| IFC's expected development contribution |
The key role of IFC will be in providing:
- long-term financing with maturity currently unavailable in Ukraine;
- assistance in developing a long-term business strategy for the company; and
- assistance in implementing HACCP food safety system. |
| Environmental and social issues - Category B |
| This is a category B project according to IFC's environmental and social review procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization will shortly be publicly available in the Environmental and Social Review Summary (ESRS) disclosed on IFC’s website (http://www.ifc.org/projects). The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that the client will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards. |
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| For inquiries about the project, contact: |
Ulyana Dovbush, Senior Investment Specialist
Universal Investment Group
72 Turhenyev Street
Lviv, 79015, Ukraine
Telephone: 38 (032) 298 8915
Fax: 38 (032)298 8902
E-mail: udovbush@uigroup.com.ua
The electronic versions of the ESRS and the ESAP will be available for public review on IFC’s website. The public can also view the ESRS and the ESAP in Ukrainian language on the Khlibprom website: www.hlibprom.com.ua.
The hard copies will be made available at the following locations:
2, Khlebnaya Str., City of Lviv.
1, Artyoma Str., City of Vinnitsa
48, Vozrozhdeniya Str., City of Gaysyn
For inquiries and comments about the project, please contact:
Mr. Valentin Melnichenko
2, Khlebnnaya str, Lviv, mail box 79035
E-mail: info@hlibprom.com.ua |
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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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