Announcement of IFC to help Finance Major Expansion of Leading Manufacturer in Colombia April 12, 1989

International Finance Corporation , C0433, US A FOR RELEASE: April 12, 1989 CONTACT: Monique Amaudry Press release No. 89/42 202/473-9331 IFC HELPS FINANCE MAJOR EXPANSION OF LEADING MANUFACTURER IN COLOMBIA The International Finance Corporation (IFC) is providing a $40 million financial package to assist Enka de Colombia, a leading manufacturer of synthetic yarns and fibers, undertake a $100 million three-year expansion program which is expected to increase Enka's sales substantially. IFC, a multilateral organization, is affiliated with the World Bank and is the leading source of direct project financing for private enterprises in developing countries. Foreign exchange financing in the form of long-term credits which are scarce for the Colombian private sector, will be provided by IFC through a $20 million loan for IFC's own account and a $10 million syndication for the account of international banks. Participating banks include Algemene Bank Nederland N.Y., Deutsche Bank Luxembourg S.A.and Swiss Bank Corporation, providing each $3 million; and Nederlandsche Middenstandsbank nv, providing $1 million. Enka plans to raise additional financing equivalent to $20.0 million from official Colombian and regional lenders (Instituto de Fomento Industrial, PROEXPO and Fondo de Inversiones Privadas) and from domestic commercial banks. Also included in the financial plan is a three-year bond issue equivalent to $10 million, which the Company has recently raised in the -2- local capital markets. This bond issue, which is Enka's first, is only the third local bond issue by a private sector group in several years. IFC is also providing a $10 million stand-by loan to be used, if necessary, after draw-down of the two previous loans. Enka de Colombia's expansion program will increase production of polyester staple fiber and polyester chip, debottleneck existing production facilities, and improve plant services and utilities. It will position the Company to respond to growing domestic production of synthetic fabrics, expand its exports to Andean Pact markets, and introduce a new product line of chips. Enka produces eight major product lines, which fall into three general categories: textile products, which represent Enka's most important product group, accounting for approximately 60% of the 1988 sales volume of $102 million; industrial products, which account for 20%; and intermediate raw materials, which account for about 20%. The Company is owned by private Colombian investors (51%) and by AKZO N.V. of the Netherlands (49%). Equity financing of over $30 million for the project will be met by share subscription and cash generation. IFC has previously supported Enka's on-going diversification and integration efforts by helping finance projects to produce nylon tire fabric, upgrade and diversify the mix of Enka's textiles yarns, and expand polyester chip production. FORM NO. 75 (6-83) THE WORLD BANK/IFC DATE: ROUTING SLIP NAME ROO NO. APPROPRIATE DISPOSITION NOTE AND RETURN APPROVAL NOTE AND SEND ON CLEARANCE PER OUR CONVERSATION COMMENT PER YOUR REQUEST FOR ACTION PREPARE REPLY INFORMATION RECOMMENDATION INITIAL SIGNATURE NOTE AND FILE URGENT REMARKS: FROM: ROOM NO.: EXTENSION: March , 1989 Monique Amaudry Press release No. 89/ 202/473-9331 IFC HELPS FINANCE MAJOR EXPANSION OF LEADING MANUFACTURER IN COLOMBTA The International Finance Corporation (IFC) is providing a $40 million financial package to assist Enka de Colombia, a leading manufacturer of synthetic yarns and fibers, undertake a $100 million three year expansion program which is expected to increase Enka's sales substantially. IFC, a multilateral organization, is affiliated with the World Bank and is the leading source of direct project financing for private enterprises in developing countries. Foreign exchange financing in the form of long-term credits which are scarce for the Colombian private sector, will be provided by IFC through a $20 million loan for IFC's own account and a $10 million syndication for the account of international banks. Participating banks include Algemene Bank Nederland N.V., Deutsche Bank Luxembourg S.A.and Swiss Bank Corporation, providing each $3 million; and Nederlandsche Middenstandsbank nv, providing $1 million. Enka plans to raise additional financing equivalent to $20.0 million from official Colombian and regional lenders (Instituto de Fomento Industrial, PROEXPO and Fondo de Inversiones Privadas) and from domestic commercial banks. Also included in the financial plan is a three-year bond issue equivalent to $10 million, which the Company has recently raised in the -2- local capital markets. This bond issue, which is Enka's first, is only the third local bond issue by a private sector group in several years. IFC is also providing a $10 million stand-by loan to be used, if necessary, after draw-down of the two previous loans. Enka de Colombia's expansion program will increase production of polyester staple fiber and polyester chip, debottleneck existing production facilities, and improve plant services and utilities. It will position the Company to respond to growing domestic production of synthetic fabrics, expand its exports to Andean Pact markets, and introduce a new product line of chips. Enka produces eight major product lines, which fall into three general categories: textile products, which represent Enka's most important product group, accounting for approximately 60% of the 1988 sales volume of $102 million; industrial products, which account for 20%; and intermediate raw materials, which account for about 20%. The Company is owned by private Colombian investors (51%) and by AKZO N.V. of the Netherlands (49%). Equity financing of over $30 million for the project will be met by share subscription and cash generation. IFC played a lead role in arranging financing for this program. The Corporation's syndication is providing a major portion of the project financing, and its involvement in the current investment program will help Enka tap local capital markets. IFC has previously supported Enka's on-going diversification and integration efforts by helping finance projects to produce nylon tire fabric, upgrade and diversify the mix of Enka's textiles yarns, and expand polyester chip production t met-+00% of-Enka OW u 3943P r 7 I