Mexico - Industrial Restructuring Project

Document of The World Bank FOR OFFICIAL USE ONLY D& A} c-47- 1G Report No. P-4835-ME MEMORANDUM AND) RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN OF US$250 MILLION EQUIVALENT TO THE UNITED MEXICAN STATES FOR AN INDUSTRIAL RESTRUCTURING PROJECT MARCH 24, 1989 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS (As of December 31, 1988) Currency Unit - Peso (Mex$) US$1.00 M Nex$2,200.00 MexSl,000 2 US$0.45 Fiscal Year January 1 - December 31 Weights and Measures Metric System Abbreviations ACF Average Cost of Funds BANCOMEXT Banco Nacional de Comercio Exterior (National Bank of Foreign Commerce) ERR Economic Rate of Return FONEI Fondo de Equipamiento Industrial (Industrial Equipment Fund) FRR Financial Rate of Return GIRA General Interest Rate Agreement (Between Mexico and the Bank) LIBOR London Interbank Offered Rate NAFIN Nacional Financiera, S.N.C. (National Financing Company) ORP Official Reference Price QR Quantitative Restriction SECOFI Secretaria de Comercio y Fomento Industrial (Ministry of Commerce and Industrial Development) SHCP Secretaria de Hacienda y Credito Publico (Ministry of Finance and Public Credit)  FOR OFFICIAL USE ONLY MEXICO INDUSTRIAL RESTRUCTURING PROJECT LOAN AND PROJECT SUMMARY Borrower: Nacional Financiera S.N.C. (NAFIN) Guarantor: United Mexican States Beneficiary: NAFIN; Banco Nacional de Comercio Exterior (BANCOMEXT); Fondo de Eqaipamiento Industrial (FONEI) Amount: US$250 million equivalent Terms: 17 years, including 5 years of grace, at the standard variable interest rate Relending Terms: NAPIN would onlend directly and through BANCOMEXT and FONEI for onlending directly to enterprises or through the commercial banking system. Subloans would be denominated in pesos or US dollars at the subborrower's option. Interest rates on peso subloans would be at least the average cost of funds of the banking system (ACF) plus 5 percentage points, providing a reasonable foreign exchange risk premium. For dollar subloans the rate for the final borrower would be at least 2 percentage points above the London Interbank Official Rate (LIBOR). These rates would include spreads adequate to cover financial intermediaries, costs and risks and provide a reasonable return on their capital. The Government would bear the full foreign exchange risk on peso subloans and the cross currency risk on US dollar denominated subloans. Financing World Bank US$250.0 million Plan: NAPIN, BANCOMEXT, FONEI US$150.0 million Intermediaries/ Beneficiaries US$100.0 million TOTAL US$500.0 million Rate of Subprojects would have economic rates of return (ERR) and Return: financial rates of -eturn (FRR) of at least 102 when financed by investment subloans and 12X when financed by equity and quasi-equity investments. Staff Report No. 7293-HE, dated March 24, 1989 Appraisal Report: This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN TO THE UNITED MEXICAN STATES FOR AN INDUSTRIAL RESTRUCTURING PROJECT 1. The following memorandum and recommendation on a proposed loan to Nacional Financiera, S.N.C. (NAFIN) for the equivalent of US$250 million is submitted for approval. The proposed loan, which would be guaranteed by the Government of Mexico, would have a term of 17 years, including five years of grace, with interest at the standard variable rate. NAFIN would be the borrower and coordinating executing agency. The Government would bear the foreign exchange risk on peso subloans against a risk premium and the cross currency risk on US dollar denominated subloans. The loan would help finance an industrial restructuring project. 2. Background. For three decades, Mexico attempted to foster industrial development by providing high levels of protection and other incentives to import substitution industries. In the textile subsector, a combination of tariff and non-tariff barriers resulted in high levels of protection for most domestically produced outputs. A 1O tariff was levied on raw wool imports, while all imports of wool tops were barred by quantitative restrictions (QRs). In synthetic fibers, a combination of high official reference prices (ORPs), used to calculate tariffs, and a 37? tariff, discouraged imports. Cotton imports were also prevented by sanitary barriers, which effectively acted as QRs, and, whenever imports were allowed to cover local shortages, they were under a state monopoly. Fi'nished textile production was also protected by QRs. As a result, effective protection rates ranged from 25Z-352 for most textile products up to 97? for wool tops. Autoparts producers were also being protected through a combination of explicit trade restrictions and domestic regulations. About 402 of domestically produced autoparts were protected by non-tariff barriers, such as QRs (26.3Z) and ORPs (13.42). The average tariff for the autoparts sub3ector was 302, and engines, frames, carburetors, and radiators were especially heavily protected. Domestically produced autoparts had to (i) account for at least 60? of the sales value of cars produced for the domestic market, and (ii) have a domestic content of at least 60Z of their own sales value. In addition, 30 specified products could only be purchased from Mexican producers. 3. To reduce the anti-export bias inherent in industrial and trade policies and to improve industrial efficiency and thereby help expand non- traditional exports, the Government, with Bank support through a series of trade policy, export development, and sector loans, introduced far-reaching measures aiming at liberalizing trade, eliminating subsidies, and restructuring inefficient enterprises. At the Bank's suggestion during preparation of the proposed project in 1987-88, the Government developed a strategy for deregulation of subsectors, which could be carried out in parallel with liberalization measures, especially in selected subsectors that (i) were high priority because of their export potential, and (ii) were being most affected by trade liberalization. To define the required policy adjustments and determine subsector-specific industrial restructuring needs, the Government (i) studied, with the support of external consultants, the impact of trade liberalization, industrial policy changes and restructuring actions, and the financial and technical assistance needs of three major subsectors with immediate export potential  -2- (textiles, autoparts, and agro-industry) which account for about 25Z of industrial value added and about 302 of non-oil exports; and (ii) formulated sub-sectoral restructuring programs and longer term strateg,es for textiles, autoparts and cut flowers. Programs for additional subsectors (shoes and furniture) have been developed, or are either being or will soon be developed (additional agro-industrial products and selected capital goods). 4. Concurrently, the Government took a series of important upfront actions for trade liberalization and deregulation measures. In textiles, the Government removed QRs and ORPs for all products except for some apparels. In automobiles and autoparts, the Government (i) removed QRs and ORPs for all parts products, (ii) eliminated the mandatory parts list for automobile producers, (iii) lifted QRs on some vehicles, (iv) reduced the domestic content requirement for domestic autoparts, and (v) relaxed restrictions on the number of lines and models that automobile producers can bring to the domestic market. 5. The industrial restructuring programs proposed in para. 8 would complement the reforms discussed above. In textiles, remaining steps include less restrictive application of sanitary regulations for cotton imports, the elimination of the monopoly of a state-owned cotton import company and its privatization, and changes in the assignment system of export quotas to emphasize high-value added products. For autoparts, the Government intends to grant high technology status to specific foreign investments in the autoparts industry, which means they would not be restricted to the 402 limitation which normally applies to such investments. The restructuring programs also include industry-level investments and technical assistance for a broad variety of purposes. 6. Rationale for Bank Involvement. The Bank's country assistance strategy hinges crucially on successful liberalization and deregulation of the Mexican economy and an adequate supply response and adjustments by industry and agriculture. The Bank's involvement in the Government's industrial restructuring program would reinforce and complement the trade liberalization and export development efforts, which have been supported by the Bank through two trade policy and two export development loans. Bank's involvement in the industrial restructuring program will initiate development of subsector restructuring policies and instruments, leading to broad sector-wide industrial deregulation and policy changes to be undertaken under a proposed Industrial Sector Adjustment Loan which is currently being negotiated. 7. Project Objectives. The project would help the Mexican economy improve the efficiency of important industrial subsectors and increase non- oil exports. The project would focus on supporting private sector restructuring policies and programs in industry, providing financial and technical assistance to companies that are affected by trade liberalization but have the potential to compete and export effectively within a more competitive domestic and international economic environment. 8. Project Description. The project would help the Government implement restructuring programs in important industrial subsectors; it would establish an industry-wide institutional framework within which viable, company-specific restructuring plans could be developed and financed. The project would consist of the following components:  -3- - A subsector specific loan component (60? of the loan amount) would provide financing for subsectors/products for which restructuring strategies have been defined (textiles, autoparts and cut flowers) or are to be defined during project implementation (e.g., shoes, furniture, additional agro- industrial products). Additional subsectors would become eligible for financing under this component once restructuring strategies acceptable to the Bank have been developed. Reallocation of the 60? reserved for investments in these subsectors could take place after the mid-term review of the project scheduled for mid-1990, taking into consideration progress in developing and implementing agreed upon subsector strategies and developing new ones. - A non-subsector specific component (342) would provide investment and working capital financing for economically and financially sound subprojects in other subsectors affected by the trade policy reforms of the Government. - A component to support irdustry level investments (4Z) would finance an action program to improve quality and design standards, and information dissemination for the textile industry, communication infrastructure and warehouses, commercial promotion programs, and management and worker training for the autoparts industry; and a training program for the cut flowers bubsector. - A technical assistance component (2X) would finance: (i) additional subsectoral restructuring studies, as necessary; (ii) consultant assistance in project implementation; (iii) computer equipment and software for SECOFI and executing agencies; (iv) training activities, including consultant assistance, by the executing agencies for their own and commercial bank staff; (v) and a promotion program by the executing agencies for the subsector restructuring programs. The total cost of the project is estimated at US$500 million equivalent, with a foreign exchange component of US$250 million (50S). A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. Retroactive financing of US$25 million will be granted for expenditures incurred after January 1, 1988, the date of project appraisal. A timetable of key project processing events and the status of Bank Group operations in Mexico are given in Schedules C and D, respectively. The Staff Appraisal Report, No. 7293-ME dated March 15, 1989, is also attached. 9. Implementation Arrangements. NAPIN, BANCOMEXT and Banco de Mexico as trustee for FONEI, would be executing agencies. WAIN, the borrower, would also be coordinating agency for all project components. Project implementation would be supervised by a coordinating policy committee (expanding the one formed under the Capital Goods Project, Loan No. 2142-ME), composed of senior officials/representatives of SHCP, SECOFI, the executing agencies, and the banking association. Eligible financial intermediaries would include commercial banks, securities firms (casas de bolsa) and investment/venture capital funds.  -4- 10. Actions Agreed. During iiegotiations, agreement was reached on long term strategy statements for the textiles and the automobile and autoparts industries. Agreement was also reached on the following on- lending terms and conditions. Subloans would be denominated in Mexican pesos or US dollars at the option of the subborrower. The General Interest Rate Agreement (GIRA), as amended, would ensure that the interest rates for final borrowers would be at least ACF (the average cost of funds of the banking system which contains an implicit foreign exchange r'sk premium) plus 5Z p.a. for peso subloans. However, for pollution control subloans, the rate would be the interest rate specified by GIRA for such investments (currently 942 of ACF). For dollar subloans, the rate would be at least LIBOR plus 2? p.a. The Government would bear the foreign exchange and cross currency risks, respectively. The lending rates for the final borrowers would be reviewed periodically to ensure that they reflect the cost of funds and include adequate provisions against exchange risk between dollars and pesos. The loan ceiling for any single enterprise would be US$15 million. Subprojects under a free limit of US$7 million would not require prior Bank approval, except for the first three subloans made under each of the following categoriest investments with borrowed funds; equity investments and quasi-equity investments. As a condition of loan effectiveness, the Bank would receive a satisfactory program to promote industrial restructuring and support regional implementation of the project. 11. Benefits and Risks. The project would help the industrial sector to improve efficiency and increase international competitiveness. Thus, the project would also support Government efforts to revive industrial growth and increase manufactured exports. Possible risks arise froms (i) international economic uncertainties which could make Mexico's export efforts more difficult and have a dampening effect on the domestic investment climate; (ii) possible difficulties in completing the ongoing domestic price stabilization program; (iii) possible back-tracking on trade policy and regulatory reforms which would slow down the industrial restructuring process; and (iv) inter-agency coordination problems which could delay the implementation of the project. To address these risks, the loan has been designed to form part of the trade pnlicy reform program that the Bank and the Government have agreed to, the proposed loan amount has been based on a conservative demand estimate for financial resources, and care has been taken to involve participating Government agencies and the private sector in the design of the subsector studies and project preparation. 12. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber Conable President Attachments Washington, D.C. March 24, 1989  -3- - A subsector specific loan component (602 of the loan amount) would provide financing for subsectors/products for which restructuring strategies have been defined (textiles, autoparts and cut flowers) or are to be defined during project implementation (e.g., shoes, furniture, additional agro- industrial products). Additional subsectors would become eligible for financing under this component once restructuring strategies acceptable to the Bank have been developed. Reallocation of the 602 reserved for investments in these subsectors could take place after the mid-term review of the project scheduled for mid-1990, taking into consideration progress in developing and implementing agreed upon subsector strategies and developing new ones. - A non-subsector specific component (342) would provide investment and working capital financing for economically and financially sound subprojects in other subsectors affected by the trade policy reforms of the Government. - A component to support industry level investments (42) would finance an action program to improve quality and design standards, and information dissemination for the textile industry, communication infrastructure and warehouses, commercial promotion programs, and management and worker training for the autoparts industry; and a training program for the cut flowers subsector. - A technical assistance component (22) would finance: (i) additional subsectoral restructuring studies, as necessary; (ii) consultant assistance in project implementation; (iii) computer equipment and software for SECOFI and executing agencies; (iv) training activities, including consultant assistance, by the executing agencies for their own and commercial bank staff; (v) and a promotion program by the executing agencies for the subsector restructuring programs. The total cost of the project is estimated at US$500 million equivalent, with a foreign exchar.ge component of US$250 million (502). A breakdown of costs and the financing plan are shown in Schedule A. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. Retroactive financing of US$25 million will be granted for expenditures incurred after January 1, 1988, the date of project appraisal. A timetable of key project processing events and the status of Bank Group operations in Mexico are given in Schedules C and D, respectively. The Staff Appraisal Report, No. 7293-ME dated March 15, 1989, is also attached. 9. Implementation ArranRements. NAFIN, BANCOMEXT and Banco de Mexico as trustee for FONEI, would be executing agencies. NAPIN, the borrower, would also be coordinating agency for all project components. Project implementation would be supervised by a coordinating policy committee (expanding the one formed under the Capital Goods Project, Loan No. 2142-ME), composed of senior officials/representatives of SHCP, SECOFI, the executing agencies, and the banking association. Eligible financial intermediaries would include commercial banks, securities firms (casas de bolsa) and investment/venture capital funds.  -4- 10. Actions Agreed. During negctiations, agreement was reached on long term strategy statements for the textiles and the automobile and autoparts industries. Agreement was also reached on the following on- lending terms and conditions. Subloans would be denominated in Mexican pesos or US dollars at the option of the subborrower. The General Interest Rate Agreement (GIRA), as amended, wo03d ensure that the interest rates for final borrowers would be at least ACF (the average cost of funds of the banking system which contains an implicit foreign exchange risk premium) plus 52 p.a. for peso subloans. However, for pollution control subloans, the rate would be the interest rate specified by GIRA for such investments (currently 942 of ACF). For dollar subloans, the rate would be at least LIBOR plus 22 p.a. The Government would bear the foreign exchange and cross currency risks, respectively. The lending rates for the final borrowers would be reviewed periodically to ensure that they reflect the cost of funds and include adequate provisions against exchange risk between dollars and pesos. The loan ceiling for any single enterprise would be US$15 million. Subprojects under a free limit of US$7 million would not require prior Bank approval, except for the first three subloans made under each of the following categories: investments with borrowed funds; equity investments and quasi-equity investments. As a condition of loan effectiveness, the Bank would receive a satisfactory program to promote industrial restructuring and support regional implementation of the project. 11. Benefits and Risks. The project would help the industrial sector to improve efficiency and increase international competitiveness. Thus, the project would also support Government efforts to revive industrial growth and increase manufactured exports. Possible risks arise from: (i) international economic uncertainties which could make Mexico's export efforts more difficult and have a dampening effect on the domestic investment climate; (ii) possible difficulties in completing the ongoing domestic price stabilization program; (iii) possible back-tracking on trade policy and regulatory reforms which would slow down the industrial restructuring process; and (iv) inter-agency coordination problems which could delay the implementation of the project. To address these risks, the loan has been designed to form part of the trade policy reform program that the Bank and the Government have agreed to, the proposed loan amount has been based on a conservative demand estimate for financial resources, and care has been taken to involve participating Government agencies and the private sector in the design of the subsector studies and project preparation. 12. Recommendation. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Bank and recommend that the Executive Directors approve the proposed loan. Barber Conable President Attachments Washington, D.C. March 24, 1989  -5- Schedule A INDUSTRIAL RESTRUCMMllg PROJEC ISTI4ALTED COSTS AD FINaNCING PLAN ,Estianted Cog,ts LocAlJ if Totgl (US$ Million) Equipment Subloans 50.0 150.0 200.0 Working Capital Subloans 150.0 50.0 200.0 Equity Investments 43.0 43.0 86.0 Industry Level Investments 5.0 5.0 10.0 Technical Assistance 2.0 2.0 4.0 TOTAL 250.0 250.0 500.0 Financing Plan Local FQreiQfn lotal (US$ Million) World Bank 0.0 250.0 250.0 NAFIN, BANCONEXT, FONEI 150.0 0.0 150.0 Intermediaries/ Beneficiaries 100.0 0.0 100.0 TOTAL 250.0 250.0 500.0  6- Schedule B Page 1 of 2 MEXICO INDUSTRIAL RESTRUCTURING PROJECT PROCUREMEWT METHOD AND DISBURSEMENTS Procurement Method NAFIN, BANCOMEXT, and FONEI have had extensive experience with Bank procurement procedures and with those of their medium and larger sized customers who will be beneficiaries under the loan. In projects they finance directly or through financial intermediaries, NAFIN, BANCOMEXT, and FONEI review the procurement procedures and decisions to assure themselves that goods and services are acquired which are suitable for the purpose intended and of adequate quality and reasonable price. Agreement was reached during negotiations on the following procurement practices to be followed under the proposed project. Item Size of Type of Financed Contract Procurement Goods and Works Up to US$3,000,000 Established Commercial Practice Goods and Works $US3,000,000-7,000,000 International Shopping Goods and Works Over US$7,000,000 International Competitive Bidding Comp-.iting and Office Up to US$300,000 Local Competitive Equipment Bidding Computing and Office Over US$300,000 International Equipment Competitive Bidding Competitive Bidding Consultants financed out of loan proceeds would have qualifications and terms and conditions of employment satisfactory to the Bank, and would be selected according to the Bank's Guidelines. Retroactive Financing It was agreed during negotiations to permit retroactive financing of up to US$25 million (1OZ of the loan) for expenditures incurred after January 1, 1988.  Schedule B Page 2 of 2 Disbursements To simplify management of the loan. the Bank would disburse against 1002 of the subsidiary loans of the project's executing agencies, either directly or through financial intermediaries, up to the financing share requested for the respective subproject. For the technical assistance component, the Bank would disburse 100l for consultant services and 802 for goods procured. Estimated Disbursements% (Bank FY I USS million) FY89 FY90 FY91 FY92 FY93 FY94 FY95 Annual 22.5 52.5 65.0 58.3 33.4 17.5 0.8 Cumulative 22.5 75.0 140.0 198.3 231.7 249.2 250.0  -8- Schedule C MEXICO INDUSTRIAL RESTRUCTURING PROJECT TIMETABLE OF KEY PROJECT PROCESSING EVENTS (a) Time taken to prepare: 20 months (b) Prepared by: Government, Banco Nacional de Comercio Exterior, Nacional Financiera (c) First Bank Mission: July 1986 (d) Appraisal mission departure: January 1988 (e) Negotiationss July 1988 and March 1989 (f) Planned date of effectiveness: May 30, 1989 (g) List of relevant PCRs and PPARs: None  9 Schedule D Page I of 2 s.rUs OF SAM o. - 7:IAT1OSW In o x2co It . Stetewont of Ionia Lean, Al of Seotebev 0, 133e (USI *; tIlon) ,:;SCe' #0unt leUsde- Loonr No. UV er Or #gvpoa@ Cnceliatioese burc d To loans fully dlgbare.d 4,329.62 1700-5 1P79 WAPtIN Irilotion ".00o 20.2? 1866-6 isle: NAFIN Irrigtion 70.00 24.63 3990 2961 SBAWAS Urban ,.g._ .t I 8 44.10 10.39 2043 1992 WAFPI Integrated *tral vw. 175.00 i5-93 2142 t912 NAFIN Capit4l Cbodt ldustry 152.20 9.12 2194 3913 DAN09RAS Urban Engengorlng 0.20 4.96 2262 1993 WAPIN Agriculttel forbeting 1t5.00 24.78 2261 1983 RANORAS Third Water Supply 100.80 83.77 2325 1913 NAFIN third Sm/Mad ledustry 17S.00 3.46 2331 1993 BANCOVEXT Expeort Development J50.00 15.78 2428 19114 9ANO9RAS Highways 200.00 94.46 2450 19'4 SANPESCA Ports Ul.30 41.7? 2t25 1996 NAFIN Chiep c Rural Reeds 22.00 19.96 2526 1985 "APIN Chiapes Agric. Dew. 90.00 75.66 2540 1986 NAFIN Sm/Med Sctle Mining 11 lOS. ,' ?2.91 2W59 1965 NAFIN Voectional Education 81.00 34.60 2S75 19W 9ANOSAS Ra1lways V W00.00 19t.18 2612 1996 8ANO0RAS Low Incme Nouof;i I 150.00 71.0? 2653 1966 NAFIN Proderith 11 109.00 *J.10 2665 1966 8AN0ORAS Earthquake Iehub 400.00 02.40 2606 l36e SAN05RAS Municieal Str.gth.nlns 40.00 87.38 2609 1918 OANOORAS Solid Wate Pilot 25.00 19.93 2745 1937 SANCOUEXT Trae Policy Loon I 500.00 10.94 2746 1967 NAFIN lnduetriel Recovery 250.00 105.03 2747 1997 NAFIN Technology Development 43.00 37. " 27,17. ;voa-, BANCOMEXT ExpOrt Development II 25S.0C 79.33 232' 1967 BANO8RAS Urban Transport 125.00 107.45 2937 19e? NAFIN Agricultural Credit 400.00 1?4.44 258 3/ 1937 NAFIN Sm/Mad Industries IV 136.00 135.00 2359 193? NAFIN Agricultural Extension 20.00 17.0? 2876 1987 SANOORAS 4igihay Maintenance 15.00 126.00 2376 1938 NAFIN Mnpower tra;ning 30.00 74.00 2882 1913 9ANCOMEXT tied. Policy Loan It 50.00 77.74 2910 1906 NAFIN Steel Sector olotruct. 400.00 J73.39 2916 1968 tAFIN Agricultural Sector Loan 800.00 239.86 2919 3/ 1938 NAFIN Fertilizer Sector Loan 265.00 265.00 2946 J/ 1903 lANOSAS Ports leabillitation C0.00 50.00 2947 J/ 1388 GANOMAS ouing F n 80O.00 300.00 Total 11 JO.; Of which too 6ees repId 2,667.65 Total am oetateadln 9,771.26 Dmet geid t S2.J4 Of whicb bee bee repaid:- 02.84 0.00 Total _ bold by Dbank 2/ *,7m 28 total _disbured 8,264.15 1/ The ettu of thprojectu #*tedlFort A is la _e report on *II 9an/IDA fIcd projects In i e-tln, ebleb Is updatod tlc. ee rly sad circuloted to tbo Lasutiwe DIretors en April J0 ad October 81. 2/ Prior to exchange adjusten 8/ Not yet effective. LoanStotueg?XC9-10:900.6276 EfAreve lo/LA2CO October 21, 1913  - 10 - Schedule D Page 2 of 2 MEXICO S. Stetenet of ItC Irveetent. As of September 80, 1996 (USO ; Il lo) FIscal A.'roveas ......... Year Obligor Type of ;usineo Equity Lo,n Totol ____*___.______~ ~ ~ ~ ~ ~ --- - -__ _ -- -__-_-----_ -_ _ -__- ----- ----* ..................... 1950/59 Imduetr il Perfect Clrcle, S.A. */ Seduatris Equipment 0.00 0.00 0.e0 119t plite.l de Maico, S.A. */ A.C. Engln Overhol 0.00 0.t0 0.60 1901 Acoroe Solor. S.A. a/ TiSt Orille 0.00 Z 80 0.30 1962/5/6/3 fWdldrs M0Ibrry. I.A. *J Stee 21.40 2.80 23.70 1998 Tvbos de Agear de Melico Stelnte. steal Pipes 0.10 0. kV 1.00 1968 Rutlce del Roy, S.A. a/ Sodium Sulphate 0.00 0.70 0.70 1904/6 lIduetria del Hierro, S.A. Coentruction equ1tmt t.00 0.00 2.00 1970 miners del Nrteo S/ Irol or. ninlng 0.00 1.50 1.50 1971 Celanee Mexicana, S.A. */ T*st) too 0.00 22.00 12.00 1972 Proeotoro Pepel Poriodlei., S.A. de C.V. o/ Pulp snd Poor b/ 0.00 b/ 1978/9 C_ntos Veracrus, S.A. Cement 0.00 15.90 15.90 l974/81 Cencun ArSotoo Hotel Tourl_ 0.0 1.00 1.30 1975/75 NezinOx, S. A. . Staotnleo Steel 820 12.00 1.20 1970/01/S4 Pape ls Pondeross, S.A. Pulp otd Paper 6.00 10.70 15.70 1970 Toreftalates Mexicanog, S.A. Petroch.ical 0.00 19.00 19.00 1979/81/07 Hotet Caotso Real lxtape, S.A. Touris 4.20 0.00 4.20 1979/84 Espresor Toltwe, S.A. Ceent 7.90 103.00 176.90 1979 Conducteras Monterray, S.A. ElectrIcal Wire S Cable 0.00 18W0^ 10.00 1900 Industries Reoeltol S A Particle O4rd 0.00 26.00 26.00 1980 Vidrit Plano do Meaieo, s.A. Flat Olass 0.00 114.90 114.90 1980 Minor* Reel do Angelos, S.A. Mintig 0.00 110.00 110.00 981/SO Colulosiceo Centaur, S.A. Pulp oad Paper 0.00 59.60 59.50 1901 Corporoelon Agro- industral L.A. Agri-Susines 8.00 11.80 14.30 1984 Capital Go de Facility a/ Crpttal Goode Financing 0.00 100.00 100.00 2".9 -8 Motalsa, S. A. Auto Chaste 1.4C0 0.00 9.40 1985 Protoeoon, S.A. de C.Y. Agri-Ousirne. 0.0 2.00 2.80 I905 Pro.ocionoa Industrial.o Mxicoaneo, S.A. do C.V. Petrochemical 0.00 16.40 16.40 1980/so Colulors y Popel de Durango, S.A. de C.V. Pulp and Paper 8.07 10.00 13.07 I987 Agrome Pho 1 (AESA) Veg and Fruit Processlng 0.50 1.50 2.00 1987. Xtduetrlas Sulfamex S.A. de C.. Chemical A Petrocemtical 0.50 2.00 2.50 19t8 Sealed Power de Meuico Auto Aas mbly 0.00 9.00 9.00 1990 Aposco, S.A. de C.V. Cme"t 0.00 46.00 40.00 1900 Slumi, S.A. ide C.V. Food and Food Proe e ik 0.00 22.06 22.06 1983 Crecent warket Aggre gte Coetructlon material 0.00 n7.00 37.00 Oross Total Comiteta 68.87 n 898026 091.08 Leow Cncelletlons, Twerluitions, Repayenta and Sales 12.09 691.69 707.60 Total Cmi_tmenta Now Held by IFC 27.20 150.67 183.95 Total Usdlawured (Zacledlsg Porticlpenft) 0.09 04.00 84.09 */ Investeente which have ben fully cencelled, terminated, written off, old, or paid b/ US25,000. IFC tlveetmen t:UXc9/0 EBArv lo/LA2CO October $1, 190