Fábrica de Papel Santa Therezinha S.A. II Project Description: The project consists of several investments that will modernize Santher's manufacturing facilities and develop feminine care products resulting in a broader product mix (tissue paper, industrial or kraft paper, and feminine hygiene products). The project will also increase the Company's capacity to recycle waste paper. The IIC's financing is primarily for this component of the project. Santher's modernization projects will reduce costs (via the increased ability to use more and lower quality waste paper and a series of energy savings initiatives), increase productivity (via improved process control and Company-wide investments in information technology), as well as to improve the handling of waste generated from paper production (through sales to ceramics producers, land filling and composting). The main investments are at the Bragança Paulista plant and include the installation of a second sanitary napkin machine (US$7.7 million), machinery to produce panty liners — a new product— (US$1.3 million), and an increase in capacity of the waste paper recycling plant output to 150 tons per day from 100 tpd (US$6.8 million). Other significant investments are: the upgrading of information technology Company-wide (US$2.4 million), modernization of equipment and a landfill at the Governador Valadares plant (Minas Gerais) (US$0.8 million), modernization of equipment and energy savings at the Penha plant in Sao Paulo (US$1.6 million), and the introduction of a fire detection and fighting system and sludge composting at the Guaiba plant in Porto Alegre (Rio Grande do Sul). Preserving natural resources by encouraging the use of recyclable products: The project will consume more recycled paper, providing an economic value to waste paper that otherwise would have to be deposited in garbage landfills. It is estimated that approximately US$2.8 million in virgin cellulose will be saved annually thanks to the use of recycled paper in the production process. Fostering the transfer of new technology: The project will help Santher acquire new technology to support its product diversification generated from paper production. The productivity of its existing machines will also increase. Generating employment: The project will create 50 permanent jobs in addition to the temporary jobs demanded during project implementation. Encouraging the production and sale of high quality products at lower prices: Santher has penetrated the market with products whose quality is similar to that of the market leader, at lower prices. Purchasing power of consumers will increase. Facilitating access to long-term financing: The IIC is acting as a lender of last resort for long-term resources in an industry that requires continuous capital investments. Santher already has good access to short-term financing. Expanding sources of medium-term financing while reducing financial exposure: The IIC will take long-term exposure while bringing into the project participating banks for the medium term working capital loan. Thus, IIC would help Santher to develop its banking relationship with the B loan lenders, to widen Santher's sources of medium and long-term financing. Project Description: The project consists of several investments that will modernize Santher's manufacturing facilities and develop feminine care products resulting in a broader product mix (tissue paper, industrial or kraft paper, and feminine hygiene products). The project will also increase the Company's capacity to recycle waste paper. The IIC's financing is primarily for this component of the project. Santher's modernization projects will reduce costs (via the increased ability to use more and lower quality waste paper and a series of energy savings initiatives), increase productivity (via improved process control and Company-wide investments in information technology), as well as to improve the handling of waste generated from paper production (through sales to ceramics producers, land filling and composting). The main investments are at the Bragança Paulista plant and include the installation of a second sanitary napkin machine (US$7.7 million), machinery to produce panty liners — a new product— (US$1.3 million), and an increase in capacity of the waste paper recycling plant output to 150 tons per day from 100 tpd (US$6.8 million). Other significant investments are: the upgrading of information technology Company-wide (US$2.4 million), modernization of equipment and a landfill at the Governador Valadares plant (Minas Gerais) (US$0.8 million), modernization of equipment and energy savings at the Penha plant in Sao Paulo (US$1.6 million), and the introduction of a fire detection and fighting system and sludge composting at the Guaiba plant in Porto Alegre (Rio Grande do Sul). Preserving natural resources by encouraging the use of recyclable products: The project will consume more recycled paper, providing an economic value to waste paper that otherwise would have to be deposited in garbage landfills. It is estimated that approximately US$2.8 million in virgin cellulose will be saved annually thanks to the use of recycled paper in the production process. Fostering the transfer of new technology: The project will help Santher acquire new technology to support its product diversification generated from paper production. The productivity of its existing machines will also increase. Generating employment: The project will create 50 permanent jobs in addition to the temporary jobs demanded during project implementation. Encouraging the production and sale of high quality products at lower prices: Santher has penetrated the market with products whose quality is similar to that of the market leader, at lower prices. Purchasing power of consumers will increase. Facilitating access to long-term financing: The IIC is acting as a lender of last resort for long-term resources in an industry that requires continuous capital investments. Santher already has good access to short-term financing. Expanding sources of medium-term financing while reducing financial exposure: The IIC will take long-term exposure while bringing into the project participating banks for the medium term working capital loan. Thus, IIC would help Santher to develop its banking relationship with the B loan lenders, to widen Santher's sources of medium and long-term financing.