Announcement of Investment in First Convertible Debentures to be Issued by a Mexican Company on February 18, 1963

FOR IMMEDIATE RELEASE l .NTERN.ATIONAL FINANCE CORPORATION 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 IFC Press Release 63/4 SUBJECT: Investment in first convertible February 18, 1963 debentures to be issued by a Mexican company. The first sale of convertible debentures to be made under a. new Mexican la.w has been transacted with a group of institutional investors outside Mexico by Tubes de Acero de Mexico, s. A. (TAMSA), the country',s sole manufacture:f of seam- less tubular steel products. The if:,sue consists of $5,000,000 of 7! per cent convertible debentures due 1975. Kidder, Peabody & co., Incorporated, of New York, negotiated the direct place- ment of the issue with a number of leading international institutional investors. They include corporations, international investment affiliates of American com- • mercial banks, pension funds, fiduciary institutions and the International Finance Corporation, an affiliate of the world Bank. IFC committed itself at an ea~ly date in the preparation of the financing to purchase outright $250,000 of the new convertible debentures, and further under- took a st~dby arrangement under which it agreed to purchase up to $750,000 principal amount of' debentures not sold to other investors. Under the standby, IFC purchased $150,000 of' the issue, bringing its total investment in TAMSA to $400,000. The 1975 debentures will be convertible into 82t, she.res of Series A and 82! shares of Series B stock of' T.AMSA for each $1,000 principal amount of debentures.- Tubes de Acero de Mexico plans to use the proceeds from the.sale of the debentures to finance its current expansion program and to improve its working capital • position • . ' ·~ ... • - 2 - Further details of the transaction are given in an announcement made by Kidder, Peabody & Co. , In<?orporated. It says : "Issuance of the convertible debentures by TAMSA was made possible through amendments liberalizing the Mexican securities laws effective December 31, 1962. Mexican companies are now permitted to go afield for new venture capital through the sale of convertible debentures, thus opening a new avenue of' investment to investors in many countries •••• "TAMSA was founded in January 1952 by G. Bruno Pagliai, who is also President. The Company began production late in 1954 upon completion of its plant near the port city s,f Vera Cruz. Since it,s inception, the company has been expanding and integrating its operations. • "It manui'actures seamless pipe through the Mannesman-Calmes process, which employs steel ingots as raw material poured directly from the :f'urnaces. TAMSA makes its own ingots from steel scrap in.its electric furnaces. "Besides supplying 'a major portion,of the seamless tube requirements of Petroleos Mexicanos, the Mexican Governmental Agency which owns and operates the country's oil industry, TAMSA has pioneered in the field of international trade. Recently the company signed contracts calling for participation in supplying ,:$7 million of seamless pipe, forged steel fittings and fabricated equipment to PASA, Petroquimica Argentina, s. A. "TAMSA. expects to begin producing hard speciality steel soon. Furthermore, it is currently engaged in iron ore exploration and in research in iron ore reduc- tion techniques with a view toward ultimate construction of a ~eduction plant near Vera Cruz and development of' useable ore bodies." •