Announcement of IFC Investment in La Internacional, S.A., Ecuador on October 13, 1965

.INTERNATIONAL FINANCE CORPORATION 1818 H STREET. N.W .. WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 65/10 Subject: IFC Investment in La For Release AM Newspapers Internacional, S.A., Ecuador Wednesday, October 13, 1965 An investment of approximately $2 million in La Internacional, S.A., the largest textile company in Ecuador, was announced today by the International Finance Corporation (IFC), an affiliate of the World Bank. This is IFC's first commitment in Ecuador. La Internacional plans to modernize e.nd expand its production facilities at a cost estimated at 111.5 million sucres (equivalent to approximately $6.l million), including provision for working capital. IFC will complete the financing for the project by making a loan of $1,720,000 and sub- ~ scribing to shares of the company in the amount of S/ 5 million (approximately $275,000). Northwest International Bank, of New York, a wholly-owned subsidiary of Northwest Bancorporati<m, of Minneapolis~ has agreed to take up part of the IFC investment. Established in 1923, La Internacional is an integrated textile manufacturer, producing a broad range of cotton textiles for consumption in Ecuador. The company operates two spinning and ·weaving plants in the outskirts of Quito. The project t~ be financed with IFC 1s assistance involves increasing the capacity of the more receqtly established plant, modernizing some of its machinery and equipment and installing new finishing and printing facilities. In conjunction with the IFC financing, the Co~ision de Valores-Corporacion • Financiera Nacional (CFN), a national development financing institution, has agreed to underwrite an issue of mortgage bonds of the company. This will be  - 2 - the first mortgage bond issue to be made directly by an industrial enterpr:lse in Ecuador., under the terms of recent legislation; it will also be! the first under- •1 writing operation to be carried out in the capital market of that country. CFN is in addition making a loan from a line of credit for industri.al lending E~xtended by the U~S. Ag~ncy for International Development. Most of the remainder of the financing is being provided by shareholders, who recently subscribed to a new share issue, and by cash generation from the company's operations. The expansion and modernization project will be supplemented by other measures as part of a long-range program to imp1·ove La Internacional• s compe- titive position. By raising its productivity and reducing costs and by expanding its product mix to include fabrics not at present made in Ecuador, the company aims to capture a share of the market now held by imports. Textile manufacturing is, after food processing, the most important industry ~ in Ecuador, employing over one""'quarter of the country's industr:i.al labor force. Measures to strengthen industry have been given emphasis in the Ecuador·an national development plan, in line with the policy of encouraging economic diversification, parti~ularly through the growth of manufacturing. By stimu- lating structural changes of this kind in the economy, it is hoped to lessen Ecuador•s dependence on earnings from a narrow range of commodities vulnerable to price fluctuations in world markets. Shares of La Internacional are held by more than 1,200 institutional and individual shareholders in Ecuador, including a number of the company's own employees. •