Sofia Med Project The proposed project is to revamp a nearly idle and ill-maintained copper processing facility, Sofia Med, and to transform it into a modern, cost efficient plant producing 120,000 tpy of copper and copper alloy products.    In December 1999, Halcor acquired the assets of the former Bulgarian copper processor, KOCM, and established a new company, Sofia Med.  At the time of the acquisition, KOCM was facing bankruptcy, it had ceased production and its creditors were selling the pledged assets.  KOCM was notoriously privatized in 1997.  The local owner did not put any money into the plant, nor made any effort to reduce production costs.  The plant''s losses continued to accumulate, and in 1999 it stopped production and was put in the hands of the court.      Halcor will refurbish the plant, inject necessary capital to restart production, and improve production methods to facilitate the transition to high value added products.  The project will be implemented in two stages over a five-year period.  The first stage will comprise mainly environmental investments (environmental clean-up of the project site, switching the main energy source from fuel oil to natural gas; replacing oil cooling with water-cooling, etc.), and investments needed to facilitate immediate commencement of the facility''s operations.  The second stage will comprise investments in the casting, extrusion, and rolling mills departments, which will allow gradual improvement in capacity utilization. The plant is currently producing small quantities of brass tubes and bars.  At project completion, the company will be manufacturing 120,000 tpy of copper and brass products, which will be marketed by Halcor, primarily to existing customers through its various global distribution outlets.     IFC Role	    This project is an example of an established Greek company seeking IFC''s help in pursuing pioneering investments in riskier operating environments. Though Halcor has an established market position globally, this would be its first overseas manufacturing investment.  IFC''s presence therefore is vital to mitigate some of the risks that Halcor would face in a different regulatory environment.  IFC is playing an important role in : (i) structuring the financial plan; (ii) prioritizing important environmental investments; and (iii) helping to revive and sustain a major productive asset and a key employer in the region.  IFC would also help the company obtain adequate long term financing at reasonable terms, which is not otherwise available.  IFC also expects to do a possible co-financing with Greek banks, thereby serving as an important catalyst in the transaction.      Developmental Impact    The proposed project will have a significant developmental impact:    (i)    Positive environmental impact:     This will include switching to energy efficient and environmentally friendly energy sources; implementing significantly better employee health and safety practices, compared to past and present practices in Bulgaria.  IFC''s participation and expertise will contribute to the implementation of an investment program which meets all World Bank, EU, and Bulgarian environmental standards.      (ii)    Demonstration effect:     In view of the perceived macroeconomic and political risks involved in investing in Bulgaria, IFC''s participation, along with the proposed co-financing from Greek banks, and presence of Halcor and Union Miniere (important and well reputed players in the field of metal processing and distribution) will have a significant demonstration effect in supporting foreign direct investment in Bulgaria''s manufacturing sector.      (iii)    Know-how transfer:     The project will benefit from the know-how and management expertise of a strong sponsor, who has significant technological know-how in investment and production of copper and copper alloy processing.  Also, the sponsor will bring into the project advanced marketing and sales techniques and a proven quality control system.    (iv)    Improved skills base:     An important part of the sponsors'' support will be on job training, which will be provided by Halcor.    (v)    Increased employment:     The project will create new employment in Bulgaria, both directly and indirectly, having an important impact in a period of high unemployment in the country.  Currently there are 200 employees in the plant, and Halcor expects to increase direct employment to about 500 people within a six-year period.  Additional employment is expected to be generated in the supply stream and in ancillary activities.  In addition, temporary employment will be provided to local labor during the construction phase.   (vi)    Supporting sustainable industries producing higher value added products:    The project would help the Bulgarian government support sustainable industries with strong sponsors, producing higher value added products.    Over the long term, the project is expected to serve as a model for further private-sector development by:  (1) providing a clear example of the application of modern management and corporate governance in Bulgaria; (2) attracting a sponsor with first-class expertise; and (3) promoting the development of a key industry for the Bulgarian economy through a strategic alliance with a well established player in the extremely competitive metal alloy processing industry.     World Bank Group strategy    The project fits well with the World Bank Group strategy for fostering sustainable economic growth by accelerating structural reform and rapid development of the private sector.  IFC supports Bulgaria''s privatization efforts by focusing on financing recently privatized enterprises, and by supporting manufacturing opportunities in various sectors, which have strategic importance for Bulgaria.