Announcement of IFC Investment in Compagnie Financiere et Touristique, Tunisia on June 26, 1969

.... H9CD FQ_R RELEA~E INTERNATIONAL FINANCE CORPORATION . 1 8 1 8 H STREET. N.W., WASHINGTON D. C. 20433 TELEPHONE: EXECUTIVE 3-6360 TFC Nei,1s Release No. 69/13 SUBJECT: IFC Investment in Compagnie F"~ Use in Morning Newspapers Financiere et Touristique, of Thursday, June 26, 1969 Tunisia IFC ORGANIZES NEW TYPE OF TOURISM DEVELOPMENT COMPANY IN TUNISIA TUNIS, June 25 -- In a new departure in building up tourism facilities for ~conomic development, the International Finance Corporation, a World Bank affili~i~, bas organized a specialized development company to promote and finance a wide range of tourism projects on a national basis in Tunisia. European, Middle Eastern and United States companies today joined with IFC a~,,1 ~ private Tunisian investors as shareholders in the $39 million project. The Tunisian Government which has given the project strong support, is providing major loan .~ssistance The innovation in Tunisia in spurring economic growth in developing countries ,hrough an institution specializing in integrated assistance to a single industry of high development potential is expected to be applicable in other countries. It is expected to have considerable and quick impact in Tunisia, whe~e the number of travelers has risen by 140 per cent in the last five years and tourist spending has become the nation's top foreign exchange earner, at Lipproximately $40 million annually. Tourism provides 10,000 jobs in Tunisia at present and can (reate an estimated 15,000 additional jobs over the next four years -- plus sub- stantial new foreign exchange earnings -- on condition that Tunisia's possibilitias • as a vacation area are nationally developed • (morP) r - 2 - • The new development company being established, Compagnie Financiere et Touristique (Cofitour), is designed to make possible such full-scale, nationwide development of Tunisia's tourism potential. Cofitour will both promote and help to finance three types of ventures: construction of new hotels, expansion or reorganization of existing hotels, and a broad range of other activities related to tourism, including transportation facil- ities. In seeking to expand hotel accommodations Cofitour will give special emphasis to increasing moderately priced accommodations. One of the principal features of the new type of tourism development project being established in Tunisia is extensive support by foreign private investors. Seven foreign investors will provide 28.5 per cent of Cofitour's share capital. They are: American Express Company, of the United States, Caisse Centrale de Cooperation ~conomique, of France; Deutsche Entwicklungsgesellschaft (DEG), of Germany; Industrial Promotions Services, of Switzerland, a company of the Aga Khan Group; a Scandinavian group under the leadership of Stockholms Enskilda Bank; Arab African Sank, of the United Arab Republic; and Kuwait Foreign Trading, Contracting and Investment Company, of Kuwait. The outside investors were invited to join the project with the objective of giving the new institution professional as well as financial strength. The fact that five of the seven foreign shareholders are engaged in tourism themselves or through subsidiaries will make available to Cofitour, and through Cofitour to Tunisia, experienced professional advice in expanding Tunisia's tourism facilities dn a sound basis, and in shaping future tourism policy as a national asset. The • ·lltesence of Arab African Bank, of Cairo, and Kuwait Foreign Trading, Contracting ;!,1d (morej  - 3 - ~ Investment Company as shareholders and lenders gives useful strength tot~ new . company. The presence of these interests from abroad in an institution established to promote Tunisian tourism is expected to be valuable also as an encouragement to other foreign capital to ally itself with the development of Tunisia's tourism ~otential. Tunisia's potential for national benefits from increased vacationing there cannot be realized unless greatly increased tourist accommodations are provided. New tourist facilities have been provided in Tunisia by a combination of private and official financing during the past few years approximating $100 million and permitting tourism to rise from a minor factor in the Tunisian economy five years ago to be the country's principal foreign exchange earner at present. However, financing for the even faster expansion now required could not be provided without • specialized assistance. The new institution was created to break this bottleneck~ Ly finding, or itself providing, financing for approximately a third tourist facilities needed over the next five years. of the new The initial resources of Compagnie Financiere et Touristique will be $39a3 million, of which $9.5 million will be share capital and $29.8 million will be loan capital. IFC is providing a quarter -- $9.9 million -- of the initial resources. The IFC commitment includes share capital of approximately $1.9 million equivalent, or 20 per cent of Cofitour's equity, and a long-term loan of $8 million. Tunisian private investors will provide 20 per cent of the share capital, partly through a public offering to be underwritten by Tunisian banks. Institu- tional Tunisian investors, including Societe Nationale d'Investissement, a private development bank IFC has helped to finance, plus Tunisian banks and insurance com- ~ p~ni~s, will provide 31.5 per cent of the share capital, making Tunisian ownersr.ip 51.5 per cent in all. (more) • - 4 - As previously noted,the remaining equity, amounting to 28.5 per cent of the share capital, will be provided by foreign investors. Cofitour is getting further foreign support through participation of private investors in the IFC commitment to the new company. Participations in the IFC :nvestment have been purchased by the Arab African Bank and Kuwait Foreign Trading, Contracting and Investment Company, both also members of the principal investment group. The Government of Tunisia is providing the company with $21,8 million equiv- alent, in three separate funds: 1) an interest-free advance equivalent to $3.8 million, to be deemed a quasi-equity fund, and to be at the disposal of the company during its entire life; 2) a $12 million equivalent loan, to be subordinated to the • •:Fe loan and to any other long-term loan contracted by the company in the t .rst 12 ysars of operation, and 3) additional loans totaling $6 million. The Government is making important tax concessions to the company. # # # •