Announcement of IFC to Provide Credit Line for Corporate Restructuring in Mexico November 4, 1988

nternational Finance Corporation Press release no. 89/21 (202) 473 93 31 FOR RELEASE: CONTACT: IFC PROVIDES CREDIT LINE FOR CORPORATE RESTRUCTURING IN MEXICO The International Finance Corporation (IFC) is providing a $60 million loan to Banca Serfin, a leading commercial bank in Mexico. IFC's loan, the Multipurpose Credit Line facility will be provided to small and medium-size private sector firms primarily to finance corporate restructurings. IFC, an affiliate of the World Bank, is the largest source of direct project financing for private enterprises in developing countries. Through this Multipurpose Credit Line, IFC, working with Serfin, will be able to provide not only financial assistance but also services and expertise to small and medium-size firms in Mexico which have excessive levels of indebtedness. IFC's corporate restructuring services involve an in-depth analysis of firms resulting in recommendations for improving operations, and developing innovative financial mechanisms known as financial engineering, to reduce debt and to restore companies' financial health. Restructuring programs introduce immediate improvements in efficiency, productivity, and cash flow enabling private enterprises to expand and modernize their operations. In addition to corporate restructurings, the Multipurpose Credit Line facility may be used for supporting privatizations and export-oriented industries. Funds will be provided primarily as long-term loans, but may be also be provided as quasi-equity and equity investments. - 2 - By assisting small and medium-size companies in Mexico, the Multipurpose Credit Line complements IFC's pioneering role in supporting the restructuring of large private companies which have been weakened by the economic crisis in 1982 and by falling oil prices in Mexico. The Multipurpose Credit Line facility is in line with the macroeconomic and structural adjustment efforts of the Mexican government. It is expected to have a strong impact and to provide substantial economic benefits to Mexico by promoting private sector growth and employment as well as helping to reduce the country's foreign debt.