INFORMATION ON IBERIA REAL ESTATE

UNCLAS TBILISI 000392 SENSITIVE SIPDIS DEPT FOR EUR/CARC, EEB E.O. 12958: N/A TAGS: EINV EFIN GG SUBJECT: INFORMATION ON IBERIA REAL ESTATE REF: STATE 15786 ¶1. Summary: In response to reftel, Post's inquiries into Iberia Real Estate (Iberia) and its umbrella company JSC Iberia Group revealed no negative information that would preclude OPIC financing. End Summary. ¶2. Iberia enjoys a strong reputation in Georgia's business arena. Iberia is a diversified company; its branches operate in construction and real estate development, and food and beverage manufacturing. Iberia was an exclusive dealer of Peugeot in Georgia, but has recently sol its automobile import business. ¶3. Iberia has substantial foreign investment. On the construction side, its main shareholder is Firebird Aurora Fund. On the food and beverage side, EBRD holds 30 percent of Iberia's shares. ¶4. Post is unaware of the failure of any of Iberia's construction projects. On the contrary, the company is known for its high quality performance. This view was confirmed by a competitor company (CID Architecture). ¶5. The owners of Iberia have a good reputation, and Post is unaware of any negative information concerning involvement in corruption, money laundering or any other violation of the law. The only controversial figure amongst Iberia's shareholders (more specifically, Iberia Refreshments) was Khibar Khalvashi, a close ally of Georgia's former Defense Minister, Irakli Okruashvili, who is currently living in exile. However, Khalvashi sold his shares shortly after Okruashvili's political scandals unfolded in 2007. Ramaz Mosiashvili, chairman of the supervisory board, is a key figure in the company and is said to be a highly competent businessman surrounded by professionals. ¶6. Post notes that the situation in Georgia's construction sector has deteriorated considerably due to the combined effect of 2008 August War and the world economic crisis. Since August, mortgage lending has declined by nearly half, respective interest rates have increased from four to six percent, and collateral requirements have been tightened. Prices on real estate have dropped, reportedly by 20 percent and are expected to decline further in the near future (Embassy Note: Accordingly, companies might be forced to recalculate projections on sales revenues. End Note). One benefit of the world economic crisis on Georgia's construction sector has been a reduction in the prices of construction materials, mainly imported from Turkey and Ukraine. After a short stagnation, the sector has started picking up, although slowly. TEFFT