Announcement of IFC First Investment of Four Million US Dollars in Bolivia for Cables and Plastic Products on March 8, 1973

: ,HOLD 'FO-R LI-~~,,.....!", .. RELEASE ., J INTERNA IONAL FINANCE CORPORATION ·1818 HST Ff:",". rJ W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 73/3 For use in morning newspapers of Thursday, March 8, 1973 IFC's First Investment in Bolivia US$400 2 000 for cables and plastic products The International Finance Corporation (IFC), a member of the World Bank Group, is making an investment of up to US$4oo,ooo in PLASMAR S.A., a Bolivian manufacturer of electric cables and plastic products. The investment consists of a loan of US$200,000; a stand-by loan of up to US¥100,000, and an equity invest- ment of approximately US$100,000 equivalent. • Plasmar S.A. is a producer of PVC piping, roofing sheets and floor tiles and Bolivia's major cable manufacturer. Net sales in 1972 amounted to about US$J million equivalent. The company is well regarded locally and enJoys a reputation for quality products. The purpose of the project is to help finance the expansion and moderni- zation of the Company's production facilities. Although the project is of modest size, it is important in the context of Bolivia's growing industry. Once the expansion has been completed, Plasmar will become one of the major private indus- trial firms in Bolivia. rl.'his is IFC' s first investment in Bolivia. It is the result of efforts b: IFC to identify suitable projects to help develop greater industrialization in ! • t • - 2 - Bolivia. The amount of IFC's investment is below the Corporation's normal. lower investment limit - a reflection of IFCis wish to be as flexible as possible in helping one of its smaller member countries. Background Bolivia's industrial and mining environment generates a demand for cables a.nd plastic products -- particularly piping -- not normally found in other countries of equal . population and development. The country's landlocked position results in costly delays in deliveries of imported cables and PVC compounds. The new project is designed to meet the needs of Bolivia's mining, construction and industrial sec- tors, for which the availability of a wider range of cables, pipes and plastic articles from a domestic source of supply will have significant advantages. Bolivia is among the least industrialized countries in South America, with its population ma.inly engaged in agriculture and mining. Manufacturing is at an • early st~ge of development, and the project ties in with the high priority assigned by the Government to industrialization. Financing The total cost of the project is US$1,246,ooo. Loan capital totalling US$550,ooo will be provided by Banco Industrial S.A.,P1~/~livian Bank)~ .ADELA In- vestment Company and IFC. Equity capital amounting to US$490,000 equivalent wi~ be provided by INDECO Peruana S.A., ADELA 1 IFC and the new share issue covered by the IFC stand-by loan. The remaining US$206,000 will come from cash generation. Economic Effects Through the backward integration of its operations Plasmar will benefit from reduced input costs, which will in turn represent foreign exchange savings for Bolitia. There will ~so be benefits in terms of added employment and development .of management skills for the country. • - 0 -