Announcement of IFC Supports Textile Recovery in Madagascar July 26, 1985

I naFia! Finance Corporation Friday, July 26, 1985 Monique Amaudry Press Release No. 86/4 CONTACT: (202) 676-9331 IFC SUPPORTS TEXTILE RECOVERY IN MADAGASCAR The International Finance Corporation is making an investment of about $6.65 million equivalent, comprising a loan of DM 20.1 million and an equity participation of FMG 116 million, to help finance a $17.2 million mill rehabilitation and cotton development project in Madagascar. The financing will be provided to La Cotonniere d'Antsirabe S.A. (COTONA), Madagascar's largest textile producer, which operates an integrated textile mill in Antsirabe and is managed by IPROMA (Ltd), a subsidiary of Groupe SOCOTA S.A., the holding company of the Ismail family, a fourth generation family of investors well known in Madagascar; Groupe SOCOTA S.A. is also COTONA's main private shareholder. The Company's rehabilitation program is designed to improve COTONA's efficiency and modernize its equipment, particularly in its finishing department. Furthermore, the project involves an agricultural component aimed at increasing the Company's cotton production to 2,930 tons of lint equivalent by 1987, from 1,800 tons produced currently, to help meet the raw material needs of the textile mill. COTONA's cloth production for 1984 was approximately 39 million meters, of which 30% for export. In addition to its investment, IFC helped the Company arrange the necessary financing, which includes a loan of FF 16 million from Caisse Centrale de Cooperation Economique, the French development agency, to finance the purchase of French equipment included in the project; a loan from European Investment Bank which amounts to ECU 6 million; and a loan from Hasy Malagasy, the local cotton development company, which is expected to finance about 70% of the cost of agricultural equipment in the project. - 2 - The project will support Madagascar's agricultural and industrial development strategy and will generate additional foreign exchange. IFC was instrumental in structuring this project, which will utilize Madagascar's domestic resources to supply an existing market for textiles and adapt COTONA's product mix to compete more effectively in the export market. The textile sector is one of Madagascar's largest, contributing about 30% of manufacturing value added, and is expected, after declining in the past, to gradually recover thanks to the significant stabilization and recovery measures undertaken by the Government in the last two years. IFC has previously invested $15.22 million in three projects in Madagascar, in a shoe factory, a shrimp fishing and processing company, and another textile project.