Cementos del Caribe S.A. Caribe is owned 67.25% (directly and indirectly) by Compania de Cemento Argos, S.A., which in turn is part of the Sindicato Antioqueno of Medellín.  The remaining 32.75% of shares are held by Cementos del Valle (4.75%); Corfinsura (3.72%) and others (24.28%).  Caribe has no technical partners. Caribes ownership in its cement-producing subsidiaries involved in the project is as follows: 71% of Tolcemento, 61% of Colclinker and 98% of Andino (Venezuela).     Project Cost Including Proposed IFC Investment    The total project cost is $88.5 million and has three components:    - the Tolcemento investment program, amounting to $14 million (16%);    - the Andino investment program, amounting to $33.6 million (38%); and    - short-term debt refinancing of $40.9 million (46% of total).      IFCs proposed investment amounts to $73 million, including an A Loan of US$15 million for IFCs own account, a B Loan of $48 million for the account of participants; and an IFC equity investment of $10 million.   The remaining funding will be contributed by Caribe.    - Location of Project and Description of Site    The project will be implemented at two locations, namely, Tolcemento, located in Toluviejo in the state of Sucre, Colombia, and Andino, located in Trujillo, Venezuela.    Tolcemento is located 26 km from Tolu, one km from the  Sincelejo-Tolu highway.  Founded in 1964, the plant has two dry process lines (1000 tpd and 600 tpd clinker) installed in 1969 and 1986, respectively. Polysius (Germany) supplied the first line, and Fuller (USA) supplied the second line.  The plants capacity is 460,000 tpy clinker and 825,000 tpy cement.  Tolcemento has its own port on the Gulf of Morrosquillo, with a loading capacity of 30,000 tons.     Regarding Andino, the nearest highway is Autopista Lara-Zulia, located 75 km from the plant. The plant has one dry process line (1,800 tpd clinker) installed in 1982 and supplied by Polysius. Andino has capacity of 540,000 tpy clinker and 594,000 tpy cement, and its own port in La Ceiba with loading capacity of 4,000 tons.    - Description of Company and Purpose of Project    Caribe, and two of its subsidiaries, Compania Colombiana de Clinker, S.A., (Colclinker) and Cales y Cementos de Toluviejo, S.A. (Tolcemento), are the leading cement producers in the Atlantic Coast Region of Colombia where they have an 84% market share in their natural market. They also represent 100% of Colombias cement exports with a 49-year history of uninterrupted cement and clinker exports.  The plants owned by these three companies have combined annual capacity of 3.7 million tons, which represent around 25% of Colombias total installed capacity.    In 1997, the Government of Venezuela awarded Caribe the right to purchase the assets of Andino, formerly the Monay Cement Complex, for $83.5 million.  The rationale for Caribes purchase of Andino included:    - a strategic investment which gives Caribe the ability to participate in the Venezuelan market where key Colombian market players also have a presence;   - Andinos strategic location which Caribe views as an ideal export platform; and   - Venezuelas favorable growth prospects.      The project selectively targets two of Caribes plants: Andino in Venezuela and Tolcemento in Colombia. The objectives of the project involve:     - modernization and capacity upgrades for both plants;    - a reduction in production costs and bottlenecks;   - environmental upgrades; and    - the restructuring of short-term debt.      The project will be implemented over 2000-2002.    The project focuses on investments required to upgrade and modernize Andino following its privatization at year-end 1997.  In just two years, Caribe has shown an impressive turn-around in Andinos operations.  The project is expected to increase the clinker production capacity of Andino from 540,000 tpy to 750,000 tpy (39% increase) as well as to reduce Andinos energy consumption, improving its production cost structure.    Tolcementos clinker capacity utilization has recently been as high as 93% and averaged 79% in 1999. Tolcemento is currently operating at full capacity and is unable to meet its U.S. demand.  The project is expected to increase Tolcementos clinker capacity from 465,000 tpy to 525,000 tpy (13% increase). Capacity upgrades will considerably help reduce fixed costs of both Andino and Tolcemento under favorable market conditions and enhanced capacity utilization.  Also, Tolcementos cash production costs will be reduced through various cost-reduction investments, and Caribe ranks its modernization program for Tolcemento as a key priority.      Caribe financed its acquisition of Andino with a one-year bridge loan which was subsequently rolled-over until December 2001. This loan was incurred on unfavorable terms.  It is intended that the portion of this loan currently on Andinos balance sheet ($40.9 million) be refinanced through a combination of IFC loans and sponsor support.  The deterioration of Colombias status in the international capital markets has virtually eliminated Caribes access to long-term financing to retailor this debt on appropriate terms as it implements its new investment program.     In sum, the timing of the proposed project is essential since Caribe can take advantage of the currently favorable cement prices in Colombia and Venezuela to carry out investments which will reduce production costs of Andino and Tolcemento.  These investments will help strengthen the Groups competitiveness in Colombia and Venezuela and position it for further growth abroad.     IFCs Role in this transaction involves:    - Access to Long-term Financing:  IFC''s long-term financing and equity capital will give Caribe an appropriate tenor and grace period to finance its investment program and combat one of the most severe capital shortages experienced in Colombia in recent years. Given that Caribe is one of few remaining important, independent cement producers in South America, its continued competitiveness in an industry characterized globally by consolidation relies heavily on its continued investment in modernization and production efficiencies and access to competitive sources of investment capital.  IFC plays an important catalytic role in this transaction.  Several of Caribe''s relationship banks have communicated to IFC their interest in supporting Caribe but have stated that they could only do so with the IFC umbrella as part of an IFC B Loan structure.    - Support of Recently Privatized Company: IFC will support Andino, which would also be a direct Borrower.  Andino, with 1999 revenues of $38 million equivalent, is a second-tier company by Venezuelan standards. Caribe has been implementing an impressive turnaround of Andinos operations and performance since Andinos privatization in 1997.     The project will have a positive development impact in Colombia and Venezuela including:    - Support for Colombia:      While Colombia enjoyed an investment grade rating, industrials had reasonably good access to investment capital on adequate terms.  Colombias loss of its investment grade rating, economic recession and political uncertainty, struggles with narco-terrorist activities, and liquidity constraints in the domestic banking sector, have completely reversed this situation and virtually cut off access to term financing for even creditworthy companies like Caribe. IFC will help fill a gap left by the exit of foreign commercial banks from the Colombian term market and allow Caribe to continue with its new investment program and growth objectives.    - Support of Independent Cement Producer and Exporter:      The project will support an important Colombian company and one of few remaining local, independent, and competitive cement producers in South America.  The Caribe Group also is responsible for 100% of Colombias cement exports, making it an important earner of foreign exchange for the country.     - Andean Pact Region:      By spanning two countries, the project promotes intra-regional commerce and cooperation between Colombia and Venezuela, two Andean Pact countries.  The project will help support the Governments initiatives to promote cross-border business and financial synergies.     - Environmental Category and Issues    This is a category B project according to IFCs environmental review procedure because specific impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria.  As part of the Project, Andino will upgrade the existing kiln/raw mill and cooler electrofilters, and the additional sources of dust generation will be operated to ensure compliance. Before disbursement, the Sponsor will present updates to the environmental impact studies prepared for the plant and the port including the mitigation actions that will ensure that the port upgrades will comply with applicable World Bank guidelines.  There will be a reduction in Andinos labor force associated with the Project, and the Sponsor will implement a workers compensation program which will fully comply with Venezuelan regulations.     As part of the project, Tolcemento will upgrade the operations and continue implementing its existing reforestation program at all the quarries and additional measures to prevent solid deposition in the water bodies nearby to ensure compliance with applicable World Bank guidelines.    Caribe has developed a corporate-wide environmental policy and will submit outlines of the environmental management programs before first disbursement.     By project completion, the operations of both Tolcemento and Andino will comply with the relevant World Bank guidelines and policies; as well as the relevant Colombian and Venezuelan environmental standards, respectively.  The sponsor will submit annually to IFC a monitoring report to demonstrate ongoing environmental compliance during the life of the project.     Based on its review of available information regarding potential environmental impacts and proposed mitigation measures, IFC concludes that the proposed project is being designed to meet environmental requirements of the Governments of Colombia (in the case of Tolcemento) and of Venezuela (in the case of Andino); and World Bank policies, and Environmental, Health and Safety guidelines.     The Environmental Review Summary is available from the InfoShop.    Host Country Location of Environmental DocumentsCamara de Comercio de Sincelejo.  Sincelejo, Colombia.    Escuela Publica Francisca Ferrini, Llanadas de Monay, Parroquia  Carrillo.  Trujillo, Venezuela    Date SPI sent to InfoShop April 24, 2000    This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporations Board of Directors.  It is provided for the purpose of enhancing the transparency of IFCs activities and should not be construed as presuming the outcome of IFC Board consideration.    For Additional Information contact:     Corporate Relations Unit   Telephone: (202) 473-7711   Fax: (202) 974-4384  Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).