Announcement of IFC Investment in Compania Industrial del Lukus S.A. (CIL), Morocco on May 27, 1966

INTERNATIONAL FINANCE CORPORATION . 1 8 1 8 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 IFC Press Release No. 66/8 Subje£i: IFC Investment in Compania For Release AM Nei;-1 spapers Industrial del Luk.us S.A. (CIL), Friday, May 27, 1966 Morocco A Moroccan food processing and canning company active in the export field is to receive financing of approximately $1.3 million from the Int,ernational Finance Corporation (IFC), an affiliate of the World Bank. ibe company, Compania Indus- trial del Lukus S.A. (CIL), is expanding its facilities at Larache in northern Morocco, principally in order to increase its exports of tomato and paprika prod- ucts to the European and North American markets. IFC is extending a loan of • $890,000 and is investing 2 million dirhams (equivalent to about $400,000) in shares of the company. Bank of America, Netv York, a subsidiary of Bank of America, N.T. & S.A., is participating in the IFC commitment. The Banque Nationale pour le Developpement Economique (BNDE), a Moroccan development finance company in which IFC is a shareholder, and two leading Spanish banks, Banco Espanol de Credito and Banco de Bilbao, are joining with IFC in the financing. The Spanish banks are making equity subscriptions, while BNDE is pro- viding·loan and share capital in the same amount as IFC. The World Bank recently ma.de a loan equivalent to $17.5 million to BNDE, its second to that institution, and a substantial portion of the BNDE investment will be provided from World Bank funds. CIL is a new· company created earlier this year to take over and expand the industrial facilities of Compania Agricola del Lukus S.A., an established Moroccan • enterprise producing and manufacturing a wide range of food products. shareholders are the Gomendio family, whose industrial and commerical interests Principal SM t  - 2 - are located both within Morocco and abroad. The assets acquired by CIL include • canning and processing facilities for tomatoes, paprika and tuna. Under the terms of the reorganization, GIL has received assurances that it will continue to obtain sufficient supplies of the agricultural products representing its principal raw· materials. The expansion program is intended to double CIL's present level of sales and to lower the company's processing costs, thereby strengthening its position in export markets, where between 60 to 70 per cent of its sales are now made. CIL 1 s financial needs will amount to DH 22 million (about $4.4 million), in- cluding provision for expanded working capital. The funds invested by IFC and BNDE will be supplemented by new equity subscriptions from some of the existing shareholders and by cash generation from operations. The company will receive special incentive payments under a Government scheme intended to stimulate new industrial investment in Morocco. Processing of agricultural products for export is of high economic priority • for Morocco, and expansion of CIL's export. capacity will help to strengthen the Moroccan balance of payments. The company expects to generate foreign exchange earnings of mor~ than $5 million a year when the program is completed. The IFC loan is repayable in 15 semi-annual installments, commencing in 1968 and ending in 1975. •