Announcement of IFC Invests in Moroccan Textile Company on October 26, 1998

IFC INVESTS IN MOROCCAN TEXTILE COMPANY WASHINGTON, D.C., October 26, 1998 --- The International Finance Corporation will invest US$14.4 million in Settavex, the largest integrated textile company in Morocco, to help it move to producing higher value-added products. IFC will provide a US$5.4 million loan and an equity investment of up to US$9 million. Settavex is responding to strong competition in the industry by undertaking a US$46 million upgrading and expansion project to shift part of its output from commodity-like basic articles to higher-margin, more refined differentiated articles such as gabardines, khakis, chinos and corduroys. Settavex, which specializes in the production of denim fabric, is 100 percent owned by Tavex Algodonera, a leading European manufacturer of denims. This investment program will help Settavex respond to global market trends and maintain its competitive edge by adding manufacturing flexibility. It will help Moroccan garment manufacturers to be more responsive in an industry where a quick turnaround time is critical, allowing them to take fuller advantage of Morocco's proximity to Europe. In the first phase of its expansion, in 1998-1999, Settavex will invest US$28 million in a dyeing and finishing facility and a 3.4 MW power generation plant. Settavex will later invest US$18 million to improve its spinning and weaving capacity. The company sought IFC funding for the first phase of the project. In a signing ceremony today, Mr. Mohsen Khalil, IFC's Director of the Central Asia, Middle East and North Africa Department said that the investment would build on Morocco's competitive advantage in the textile sector and enable Settavex to be responsive to its clients by providing just-in-time delivery. Mr. Enrique Garrán, Chief Executive Officer of Tavex added that cooperation with IFC should offer enhanced opportunities for the Group not only in the European markets, but also in other regions of the world where the company has a strategic interest. IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses. IBRD IDA IFC MIGA ICSID