Announcement of IFC Supports Twelve Million Twenty Thousand US Dollars Expansion Program for Ecuador to Increase Textiles Output on April 4, 1972

't _ t/N TERN AT ION AL FIN AN CE CORPORATION . 1 8 1 8 H STREET, N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 72/6 April 4, 1972 Ecuador to Increase Textiles Output IFC Supports $12.2 Million Expansion Program The largest textile manufacturer in Ecuador is again to expand its \\ productive capacity with the help of the International Fi!nance Corporation, an affiliate of the World Bank. La Internacional S. A. , of Quito, Ecuador, is receiving a loan of $2. 0 mil- lion from IFC to support a $12.2 million expansion program. A previous expansion project was supported by IFC in 1965, with a loan of $1,720s000 and • an equi.ty investment of $243 1 309 • The proJ~ct consists of a :}lew spinning and weaving plant with an annual capacity of ap1~roximately 10 milliQn yards of textile fabrics, a small hydro- I ;/ electric plan~; for its power supply, and expanding and modernizing the ;/ fl finishing section of the existing plant. The object of the expansion program :is to increase the company's share in the growing Ecuadorian market by expar~ion and modernization of its pro~ duction facilities to enable it to operate more efficiently a11d to produce higher quality fabrics. The project is already well advanced and is planned to be substantially completed by mid-1972'.. With this investment, If'C'~s commitments in Ecuador total $4.2 million. Background La Internacional has been in operation for almost 50 years .. < H is the • leading textile producer in Ecuador and one of the country's tiiajor industries • /mt,re  IFC P.R. No. 72/6 -- Ecuador -- textiles ' j'' • - 2 - Its ownership is widely distributed locc;tlly; in December 1971 had about 2,000 shareholders. The only non-local shareholder is IFC as a result of its 1965 investment. The market for cotton based textiles in Ecuador has grown at an average annual rate of 6% since 1966 and at least the same growth rate is expected in the future. At present about 75% of the total consumption of textiles i,n the country is supplied by local manufacturers. Financing The total cost of the project is estimated at $12.2 million, including $4.0 million of working capital. The financial plan includes $2.8 million provided by a share capital increase, long-term loans of $2.8 million • equivalent made b.y two local development finance companies, suppliers' credits of $1.4 million and IFC's $2.0 million loan in which the Bank of Montreal is participating. Short-term borrowings will provide a further $2 .O million and the remaining $1.2 million will come from the company's own cash generation. Economic Effects The expansion project has a high priority in the plans for the cotmtry's economic growth and will result in annual foreign exchange savings of about $6 mill.ion and an additional labor force of 400 will be employed. - 0 - •