Announcement of IFC Investment in the Siam Cement Group of Companies, Thailand on April 9, 1969

. FOR IMMEDIATE RELEASE f INTERNATIONAL FINANCE C ._JR PORA TION . 1 8 1 8 H STREET. N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 IFC News Release No. 69/10 SUBJECT: IFC Investment in the Siam April 9, 1969 Cement Group of Companies, Thailand Making its largest investment to date, the International Finance Corporation, World Bank affiliate for investment in private businesses, will help finance a $60 million expansion of Thailand's construction materials industry, a key factor. in Thailand's economic growth. The investment drew record backing by ten major private financial institu- tions in the United States and in Europe. IFC is committing $22 .1 million to help finance expansion of Th,':'lHand' s • biggest building materials producer, the Siam Cement Group of companies • Private financial institutions bought for their own portfolios $14.1 million, or 64 per cent, of the IFC commitment. This exceeded considerably participations in any previous IFC investment. IFC's transaction with the six-company Siam Cement Group involves financing five separate but inter-related companies which are carrying out four capital expansion programs. A financing plan was worked out for the project to serve the dual purpose of providing funds as needed to the four expansinn programs, and to make possible extensive participation by private foreign investors. The Siam Cement Group industries being financed includ~ a cement plant, a 150)000 ton steel rolling mill, an asbestos cement sheet plant and a concrete pipe plant. Siam Cement Group companies produce and sell most of the cement and other building materials used in Thailand. The Group is one of the largest c.emF?.ut. • manufacturers in Asia. (more) 'W, · 1 t .. · • - 2 - IFC's commitment is in the form of an $18 million loan, and equity invest- ments totaling approximately $4.1 million. The ten North American and European p~rticipants in the IFC commitment in- clude 17 banks and other financial institutions: The Bank of America NT&SA Group, consisting of the Bank of America, Bamerical International Financial Corporation, and the World Banking Corporation Limited, in Nassau, the Bahamas; Manufacturers Hanover Trust Company and its affiliates, Manufacturers Hanover International Finance Corporation, and Manufacturers Hanover International Banking Corporation; Dresdner Bank A.G., of Germany; the First Nati<:n:~<!l City Bank Group, consisting of the First National City Bank Inter- national, the First National City Bank, and the First National City Overseas Investment Corporation; Continental Illinois National Bank and Trust Company of Chicago; Irving Trust Company and its affiliate, Irving International Financing Corporation; Philadelphia International Investment Corpora- • tion; Banque de l'Indochine; Skandinaviska Banken, of Sweden; and Commerzbank A.G., of Germany. The IFC loan is being provided to the Siam Cement Company, Ltd., the leading member of the Group. Siam Cement will relend portions of the IFC loan to three other members of the Group: Siam Fibre Cement Company, Ltd., Concrete Products and Aggregate Company, Ltd., and the Siam Iron and Steel Company, Ltd. All member companies of the Group make themselves individually as well as jointly responsible for repayment of the loan. With its equity investment, IFC will acquire 6-2/3 per cent of the shares in each of five member companies of the Siam Cement Group: Siam Cement Company, Ltd., Siam Fibre Cement Company, Ltd., Concrete Products and Aggregate Company, Ltd., Construction Materials Marketing Company, Ltd., and the Siam Iron and Steel Company, Ltd. • In addition to these five companies the Siam Cement Group includes the Siam Industrial Credit Company, Ltd. (mor~) • - 3 - IFC, and its participants, will obtain options for additional shares in two companies in the Group. Thailand's construction sector has set the pace of overall industrial expan- sion in the past several years, when Thailand's industrial growth has averaged about 15 per c~nt a year. Shares in the Siam Cement Group companies are widely held by the Thai public, with the number of shareholders ranging from 1,000 for the Concrete Products and Aggregate Company to 2,500 for the Siam Cement Company. The new projects under the Siam Cement Group's expansion program, scheduled to be completed by the end of 1971, are: 1) A 1,500 ton per day cement factory to be built by the • Siam Cement Company, to serve markets in northeast Thailand • 2) A 58,000 ton per year asbestos sheet plant of the Siam Fibre Cement Company, to be located near the new cement plant, coupled with expansion of pipe making facilities and addition of a line of "Asbestolux" fireproof products. 3) A pipe plant to be built by the ~)ncrete Products and Aggregate Company at its factory near Bangkok, which will produce large diameter pipes used for drainage and sewage lines. At this facility, a line to produce "Sakrete," a dry ready-mix mortar, will be added, and concrete blockmaking facilities will be expanded. 4) A 150,000 ton rolling mill to produce reinforcing bars will be installed by the Siam Iron and Steel Company at its plant at Ta Luang, some 100 kilometers north of Bangkok. The new plant will have facilities to produce 80,000 tons of billets from domestic and imported scrap. The other 70,000 tons will be produced from impor" ad billets. Existing foundry and refractory plants will be expanded by this company. The $56.7 million being provided by the current financing will implement an expansion program to take place from 1969 through 1971. The Siam Cement Group ha3 • previously incurred capital expansion costs of $3.3 million in the opening phase of its program to increase its production capacity and modernize facilities in its various lines of endeavor. (mere) • - 4 - Financing for the subsequent phases of the Group's expansion program will come from IFC's commitment of $22.1 million; $14.5 million equivalent from supplierA in Denmark, Germany, Switzerland and the United Kingdom; $13.1 million from cash generation and bank borrowings; and equity investments of $7 million equivalent by the present shareholders in the Group companies. The financial plan for the Siam Cement Group's new projects is as follows: U.S. Dollars and Dollar Equivalents (million) ~quity Capital Share issues and calls •...•••.•..•..••.. $ 7.0 IFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 .1 $11.1 • Loan Capital IFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18. 0 Credits from suppliers .•. .••••••••.•.•.. 14.5 Cash generation and bank borrowings . • • • • 13 .1 $45.6 Expenditures already incurred ..•••.•.•••.•..• $ 3.3 TOTAL .••...•.•••..•.••..•.•...•.... $60.0 IFC's commitment to the Siam Cement Group is the third investment by the Corporation in Thailand. In 1959 IFC made a loan to Concrete Products & Aggregate Company, Ltd., a member of the Group, and in 1964, IFC made an equity investment in the Industrial Finance Corporation of Thailand, a private development bank. • 4fa