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Summary of Project Information (SPI)

This Summary of Project Information 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 number20744
Project nameGrupo M
CountryDominican Republic
SectorGarment and Apparel (Without Fabric , Excluding Footwear)
Department
Company nameGrupo M
Environmental categoryB
Date SPI disclosedMay 1, 2003
Projected board dateJune 12, 2003
StatusActive
Previous EventsInvested: March 22, 2004
Signed: January 16, 2004
Approved: October 9, 2003

Description of company and purpose of project
Founded in 1986, Grupo M is the largest private sector employer in the Dominican Republic with 12,000 employees working in 22 production facilities and is the largest apparel producer in the Caribbean/Central American region supplying to major US brand name companies including Liz Claiborne, Polo, Levis, Hanes and Tommy Hilfiger.

The Haiti Project is a phased development of a 500,000 m2 site on the border of Haiti and DR. Phase 1 of the investment program will develop an area of 150,000 m2 for a total investment of $11 million. Upon completion, Phase 1 is expected to generate 1,500 direct jobs and up to 3,000 indirect jobs for Haitian workers in the adjacent area. Subsequent development is expected to include outside customers producing apparel, footwear and other products who would lease or purchase facilities built to order by the zone development company, which will be 100% owned by Grupo M. The total site area would allow up to 40 factory units providing as many as 20,000 direct jobs and 40,000 indirect jobs at full capacity. The project is to provide
- a corporate financing to Grupo M (the Group or the company), a vertically integrated apparel manufacturer in the Dominican Republic producing knits and woven products for the US market, to finance ongoing capital expenditures, long term working capital needs and to refinance existing obligations, and
- a loan to finance an export zone promoted by Grupo M focusing on garment production in the Republic of Haiti (the Haiti Project).

Project sponsor and major shareholders of project company
The founding companies for Grupo M were established in 1986 by Fernando Capellan, a Dominican Republic (DR) entrepreneur. Grupo M, the holding company, was established in 1993. Fernando Capellan and family members are the controlling shareholders who, together with senior management and company staff hold 82% of the outstanding share capital. Banco Popular, the largest financial group in the Dominican Republic holds 10% of the outstanding shares, while the remainder is held by other local shareholders.

Total project cost and proposed IFC investment
The total cost of the project is estimated at $43 million of which $11 million is the projected cost for the first phase of the Haiti Project. The proposed IFC financing consists of a $20 million loan for IFC’s account to Grupo M to fund ongoing capital expenditures and debt restructuring and a second $3 million loan for IFC’s account to the Haiti Project development company.

Location of project and description of site
Grupo M’s main production facilities are located in two industrial zones developed by the group in Santiago, Dominican Republic. The Haiti Project is located on the northern border of the Dominican Republic and the Republic of Haiti on the outskirts of the towns of Ouanaminthe (Republic of Haiti, population 56,000 ) and Dajabon (Dominican Republic, population 65,000).

The development plan for phase 1 of the Haiti Project will include
- site clearing and access roads and utilities,
- training center, staff facilities (medical services and cafeteria) and customs clearing offices, and
- 3 factory buildings owned by Grupo M.

Project Development Impact and IFC's Role
Grupo M is the largest private sector employer in the DR. The company has been an innovator in adopting sustainable business practices since its founding. The Group has ISO9002 certification and has won awards for labor practice and corporate citizenship. Financing of Grupo M is an opportunity for IFC to secure the long term growth of the Group.

The Haiti Project will have a very significant development impact. This project is the key private sector development in the Republic of Haiti creating an opportunity to rejuvenate the garment sector in the country, which once employed more than 60,000 people but has reduced substantially in the past 10 years. If successful, the development of the zone and the direct investments by Grupo M can be expected to mobilize significant other private sector investments creating as many as 60,000 direct and indirect jobs and thus a dramatic impact to alleviate poverty. IFC is working closely with the Group on additional initiatives in support of sustainability and linkages to the wider community in Haiti.

IFC will play a key role in this investment, firstly through its support of a major private investor making a first investment in the Republic of Haiti. IFC’s presence as a long term investor will significantly enhance the attractiveness of the Haiti Project for Grupo M and for other private sector investors who can be expected to follow their lead. The proposed IFC corporate financing of Grupo M will provide otherwise unavailable long term funding to significantly bolster the long term competitiveness and sustainability of Grupo M, the largest employer in the DR and the flagship of the Dominican garment sector.

Environmental and social issues - Category B
This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical and environmental/social information submitted by the project sponsor as well as a site visit by an environmental and social specialist in April 2003. The following potential environment, health and safety and social impacts of the projects were analyzed.

- Corporate Environmental and Social Management Systems and capacity;
- Land acquisition and economic displacement;
- Air emissions and noise;
- Water supply and discharge;
- Solid and liquid waste disposal;
- Use of CFCs;
- Occupational health and safety including employee exposure to noise and dust;
- Fire protection and emergency response;
- Trans-boundary and influx migration issues.

The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the Environmental Review Summary which has been released for public consultation in parallel with this document.

To view the environmental documents for this project, click here


Location of environmental documents in locally affected community
The Environmental documents and ERS will be made available at the following locations:

-a) Dominican Republic
On the bulletin board, in the medical center and the cafeteria of the Grupo M @
Caribbean Industrial Park Matanzas Santiago, Dominican Republic

b) Haiti consulate in Dajabon.
Consulate in Dajabon
C/ Presidente Henriquez
Dajabón
Jean Bautiste Bien-Aime-Consul
Phone: (809) 579-8287

(c) Governors Offices
C/ Victor Ml. Abreu
Dajabón
Casiano Lora- Governor
Phone: (809) 579-8268
- Republic of Haiti
(d) Police Offices Saint Pierre, Street Ouanaminthe Phone: 011-262-5884
(e) Municipal Council Calle Du-Mamche #3
Ounaminthe

To contact the project company, please write to:
Mercedes de Lama, Group Chief Financial Officer
Grupo M
Caribbean Industrial Park
Santiago, Republica Dominicana
e-mail: mcapellan@grupom.com.do

IFC contact information:

Brian Mc Namara, Señor Investment Officer
Global Manufacturing and Services Department
e-mail: bmcnamara@ifc.org

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