Announcement of IFC Makes First Madagascar Investment Eleven Million Thirty Thousand US Dollars for Textile Mill Expansion on May 10, 1977

• I ntematiorzal Firzance Corporation IFC Press Release No. 77/16 1818 H Street, N.W. Washington, O.C. 20433, U.S.A. 20.?.-393-6360 Tuesday, May 10, 1977 IFC Makes First Madagascar Investment $11.3 Million for Textile Mill Expansion The International Finance Corporation (IFC), an affiliate of the World Bank, is making its first investment in Madagascar with an $11 million loan and $290,000 equity conunitment to help finance the expansion of Societe Textile de Majunga S.A., a fully integrated textile mill established in 1968 by the co-founders, the Government and Seditex Engineering GmbH of the Federal Republic of Germany. Additional equity for the $37.7 million project consists of ~ $482,000 from the Government of Madagascar and $145,000 from the German Development Company (DEG). DEG will provide a loan of approximately $1.5 million and Sifida Liberia (a subsidiary of Sifida ....;_ Societe Internationales Financiere pour les Investissements et le Developpement en Afrique, S.A. of Luxembt1urg) has syndicated a $3 million Eurodollar loan for the project. Cash generation and suppliers' credits complete the financing. Contingent financing of up to $4 million will be provided by a consortium of local banks. The project includes tlie installation of new spinning, weaving, finishing and garment making equipment at the Company's plant at Majunga in northwest Madagascar. It will increase productive capacity by about 5.7 million meters to 40 million meters a y~ar. Of the increase, approximately 3.6 million meters will be used to meet growing local demand and to replace imports, and 2.1 million meters will be exported in the form of finished garments and µrinted cJoth . • IFC Press Release No. 77/16 - 2 - The project is expected to benefit Madagascar's economy by • generating some $4 million in net foreign exchange savings annually and will create about 1,200 new jobs. The project will utilize locally- grown cottori, production of which has been assisted by World Bank finance, as its principal raw material. Seditex Engineering is the technical sponsor of the Company and will implement the project~ IFC, DEG, Sifida and Seditex are also associated in a textile project in Kenya. • (Any i1nquiries strictly relating to IFC's participation in this project should be directed to the IFC Information Office, 1818 H Street, N.W., Washington, • D.C. 20433, Telephone (202) 477-6247.)