Announcement of IFC Assistance to Privatize Textile Company in Tunisia December 15, 1987

IP~@ l -e;nationa 818iin H 20433t N S A International Finance Corporation V D 0433 USA FOR RELEASE: Tuesday, December 15, 1987 CONTACTionique Amaudry Press Release No. 88/22 (202) 676-9331 IFC HELPS PRIVATIZE TEXTILE COMPANY IN TUNISIA The International Finance Corporation is making a $3.1 million equivalent investment to help finance a $13.8 million project for the privatization and modernization of Societe des Industries Textiles Reunies (SITER), the longest established finishing mill in Tunisia. IFC is acquiring for its own account 10 percent of the Company's shares. In addition, 25 percent of the shares will also be held by IFC through a GRIP arrangement with Dollfus-Mieg & Cie (DHC), a major French textile group, for an amount of D 1.25 million ($1.56 million equivalent). Sixteen percent of the equity will be acquired by two private com- mercial banks, Banque Internationale Arabe de Tunisie (BIAT) and Banque de Tunisie. The other shareholders are two development finance institutions, Banque Tuniso-Koweitienne de D6veloppement and Banque Tuniso-Qatarie d'Investissements, and Soci6t6 G6n6rale des Industries Textiles (SOGITEX), a government holding company. IFC's equity investment will help achieve the privatization of SITER by attracting DMC and Tunisian private interests and will provide SITER access to DMC's managerial and technical assistance to improve its competitiveness in both local and export markets. The project also involves the rehabilitation and expansion of SITER's production facilities, to be financed by a F 15 million loan - MORE - 0?22-05 0297 V2fn der M6ndelpp G. Ko I 11-001 ~4 -2- ($2.7 million equivalent) from IFC, a $5 million equivalent lease from the Islamic Development Bank and an $1.8 million equivalent loan from the two Tunisian development banks (BTKD and BTQI). Upon completion of the program in 1988, SITER will have the capa- city to process up to 30 million linear meters of fabric for the domestic and export textile markets. SITER was a subsidiary of SOGITEX, the main public sector textile group which the Tunisian Government decided to privatize as part of its overall policy to disengage from all non-strategic economic activities. In this context, the Government called on IFC to assist in attracting private investors in the SOGITEX Group. IFC is the leading multilateral institution which provides financ- ing without government guarantees to private enterprises in developing coun- tries. GRIP is a mechanism available to equity investment in developing countries whereby the investor provides the funding, IFC makes the invest- ment in its name and assumes the full risk of loss of principal for any reason; dividend income and capital gains on the investment are shared; and, at the end of an agreed period, the investor may decide to become the full legal and beneficial owner of the shares, or disengage from the investment with principal intact. IFC holds investments in ten other Tunisian enterprises, in chemicals and petrochemicals, development finance, tourism and services, manufacturing, textiles, energy and mining and capital markets. - END -