Announcement of IFC and IDB will Help Finance Heavy Machinery Plant in Mexico on January 7, 1964

INTER-AMERICAN DEVELOPMENT BANK 808 17TH ST .• N.W. WASHINGTON 25, D. C. EX. 3-4171 INTERNATIONAL FINANCE CORPORATION 1818 H ST., N.W. WASHINGTON 25, D. C. EX. 3-6360 JOINT PRESS RELEASE IFC Press Release No. 64/1 IDB Press Release NR. 7/64 SUBJECT: IFC arrl IDB will help finance For automatic release at 11:'30 a..m. ES'? heavy machinery plant in January 7, 1964 · Mexico The International Finance Corporation (IFC), an affiliate of the World Bank, and the Inter-American Development Bank today announced that they are participating with Mexican ani Frereh investors to provide loan and share capital to Industria del Hierro, S.A., of Mexico, to finance a heavy equipment • manufacturing plant. The company is constructing the plant in a new industrial park now spring- ing up in the Queretaro Valley of Mexico. The undertaking is sponsored by Ingenieros Civiles Asociados, S.A. (known as the ICA Group), a leading M:3.xican organization comprising several construction arrl industrial companies and engineering services. ICA shareholders have subscribed $4.4 million equivalent to Industria del Hierro' s share capi ta.l, which is now being increased to $8 million equivalent. The financing plan includes: - An Inter-American Bank loan of $3 million equivalent from its ordinary resources. - An IFC investment for the equivalent of $1.6 million, in 20,000 shares • of the company's stock • - A $1.2 million investment by Nacional Financiera, a Mexican Government financi~ agency, in 15 ,coo shares.  , • - 2 - - An investment of $400,000 each by the Banque Nationale pour le Commerce et liindustrie (BNCI), and Etablissements Neyrpic, of France, each subscribing to 5,0JO shares. Nacional Finan ~iera will additionally undertake to guarantee repayment of up to $4 million of suppliers' credits. The construction work at the plant in Queretaro, abt::ut 140 miles north of Mexico City, began in 1962 an:i it is expected to be finished by 19640 'The new facilities will enable the ccmpany to fill special orders for such capital goods as turbines, sluices and tanks, as well as produce a broad range of standardized equipment, including hydraulic gates, soil compacting equipment, mechanical shovels, crushers, hydraulic presses, tower cranes, graders and gantries~ Establishment of this plant and related facilities is of high economic priority for Mexico, and will be an important addition to the country's con- • struction and heavy equipment industry. The location of the plant will assist the economic development of Central Mexico, in accordance with the Government's objective of industrial decentralization. The region encompassing the city of Queretaro is being developed under a regional plan known as the Lerma Plan, which has received the Inter-American Bank's support both through technical assistance arrl financing of specific agricultural and industrial projects. Virtually all iron and steel to be consumed by the plant, including plates, sheets and shaped structural steel, will be procured from Mexican suppliers. In addition, other ne teri 9.ls, such as oxygen and acetylene, will be supplied domestically. M('lst of the ccmpany• s production will meet a growing demand which otherwise would have to be satisfied by imports, so that the company•s output will achieve substantial foreign exchange savi~s for Mexico. del Hierro also expects to develop export business in the countries of the Latin American Free Trade Association. Industria • tsre wear-· • - 3 - The ICA Group started 15 years ago under the leadership of senor Bernardo Quintana, the civil engineer who is Chairman both of the Board of ICA and of Industria del Hierroo Besides helping to increase Industria del Hierro's share capital, ICA will provide a well-trained and capable mar.agement group, and will bring to the project the benefit of a wide knowledge and experience of the construction trade and market. Industria del Hierro has completed agreements with Neyrpic and Alsthom (Societe Generale de Construction Electriques et Mecaniques Alsthom), two closely associated French engineering firms, to assist the company's investment and production schedules. Co-Reel S.A. and Maison Tichauer, both also of France, will provide additional technical assistance in various capacities. Other technical assistance agreements have been completed between Ind:tJ.stria • del Hierro and its subsidiaries and several industrial companies in the United States and Europe. One subsidiary, Link-Belt Speeder Mexicana, S.,A. (LBSM), has been created with the technical and financial assistance of the Link Belt Company of Cedar Rapids, Iowa; it recently began assembling mechanical shovsls an::i it will later manuf'acture tower cranes. Industria del Hierro is also negotiating the establishment of a subsidiary with the technical assistance of Huber & Warco Corporation of Marion, Ohio, for the production of motor graders. Another subsidiary is being established to manuf'acture a variety of soil com- pacting equipment and vibrators with technical assistance from S.A. des Anciens Etablissements Albaret, of France, and AB Vibro-Verken, of Sweden. Industria del Hierro has arranged with Aerojet General Corporation, of Sacramento, California, to use the company's process for shaping sheet and • plate. Other agreements with United States companies include licensing for manufacturill5 hydraulic press brakes, hydraulic bending, hydraulic shearing machines, and concrete batcrJ.ng and mixing plants.  ••• - 4- The Inter-American Bank loan was made for a term of 10 years and b<~a:ts an interest rate of 5-3/4% annually, including the 1% commission allocated to the • Bank's special reserve. It will be repaid in 17 equal semi-annual installments beginning two years after the date of the loan contract. It will provide Industria del Hierro up to $1.3 million in U.S. dollars to cover part of the cost of imported materials. The balance will be provided in Mexican pesos to help finance local expenditures. Principal and interest payments will be made proportionately in the currencies lent. • • 'I ta· Rt t Sf%