Announcement of IFC Participation in Financial Institution to Support Ecuador's Industrial and Financial Sectors on February 4, 1988 : Announcement of IFC Participation in Financial Institution to Support Ecuador~^!!^s Industrial and Financial Sectors on February 4, 1988

~)ACT: February 4, 1988 Monique Amaudry Press Release No. 88/29 202/676-9331 IFC PARTICIPATES IN FINANCIAL INSTITUTION TO SUPPORT ECUADOR'S INDUSTRIAL AND FINANCIAL SECTORS The International Finance Corporation is participating in a $30 million seed-funding package which will provide Compafiia Financiera Ecuatoriana de Desarrollo S. A. (COFIEC) with new resources for project finance and strengthening of its capital base. COFIEC is owned by over 600 local enterprises and individuals (81.8%), Continental International Finance Corporation, USA (10.1%), DEC, the German Development Company (5.8%), and IFC (2.3%). COFIEC is Ecuador's oldest and largest private development finance corporation and a leading provider of term-finance. IFC, an affiliate of the World Bank, is the largest source of direct project financing for private investment in developing countries. The proposed financing for the project includes: - An IFC subordinated loan of $4 million and a DEG subordinated loan of $3 million equivalent, designed to help improve COFIEC's funding structure; - New equity subscriptions of up to $3 million equivalent by shareholders, including IFC and DEG, to further strengthen the Company's capital base; - MORE - -2- - An estimated $10 million in World Bank term loans to be channeled through the Central Bank of Ecuador; and - Incremental letter of credit lines of up to $10 million by international commercial banks, to complement long-term project financing and enhance COFIEC's financial services to clients. The financial package will support an overall institutional strengthening program to be carried out by new COFIEC management with IFC's assistance as part of a financial sector reform project supported by the World Bank. The project will help improve COFIEC's profitability and prospects, and is consistent with the Government's development priorities to increase the role of financial institutions in the Ecuadorean economy. - END -