WASHINGTON, D.C., June 27--The International Finance Corporation (IFC) has approved US$27 million in financing for the Alexandria National Iron and Steel Company (ANSDK), an internationally competitive Egyptian producer of reinforcing steel bars that is being privatized. IFC's financing consists of an equity investment of about US$7 million, which will increase IFC's shareholding in the company from 3 percent to 5 percent, and a loan of US$20 million. In addition IFC is arranging a Yen/U.S. dollar currency swap of an amount equivalent to about US$112 million. This will enable ANSDK, which has revenues linked to U.S. dollars and liabilities in yen, to hedge against exchange rate fluctuations, and will put the company in a better position to attract private capital. IFC arranged two similar risk management transactions for ANSDK in 1991 and 1992. ANSDK has embarked on a US$225.5 million project to expand its production capacity by about 40% by 1997 in order to satisfy growing domestic demand. The company will a
lso upgrade its steel-making facilities and improve its environmental and safety standards. The privatization of ANSDK is a key component of the economic reform program launched by the Government of Egypt in 1991 and supported by the International Monetary Fund and the World Bank. The company will be privatizated in two stages: the dilution of the public sector shareholding through a US$70 million capital increase, followed by the divestiture of the public sector shares. ANSDK's employees have subscribed to the new issue. The company's foreign partner, a consortium of Japanese steel producers Nippon Kokan, Kobe Steel, and Toyo Menka Kaisha (Tomen), has also subscribed to maintain its 10% share of ANSDK's capital. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector companies in developing countries.
