WASHINGTON, D.C., May 3 -- The International Finance Corporation (IFC) has approved an equity investment of US$1 million and a loan of DM 14.7 million for the expansion and modernization of Liteksas Ir Calw A.B., a woolen textile mill in Kaunas, Lithuania. This is IFC's first investment in Lithuania, which became a member of IFC in August 1993. Deutsche Investitions-und Entwicklungsgesellschaft is also performing a significant financing role alongside IFC.
The investment project, which will cost US$27.2 million equivalent, will enable Liteksas to become more efficient, diversify its product line, increase its output capacity, and upgrade product quality for export to Western Europe. The project is the second largest foreign direct investment in Lithuania to date. Its success is likely to be a catalyst for additional foreign direct investment.
At project completion, Liteksas Ir Calw A. B. will be owned 66 percent by Calwer Decken-und Tuchfabriken AG, a family-owned German company with a 350 year textile manufacturing tradition; 14 percent by Liteksas' employees and Lithuanian investment funds; 4 percent by the Government of Lithuania; 8 percent by Deutsche Investitions-und Entwicklungsgesellschaft; and 8 percent by IFC.
"Calw brings market access and fabric finishing know-how to meet export quality standards, and the Lithuanian partners bring a long tradition of woolen textile manufacturing and a skilled, competitive work force," said Edward Nassim, Director of IFC's Europe Department. "IFC expects these complementary strengths will develop a viable and competitive export company."
IFC assisted in structuring the project and tailoring the financial plan. Financial support from the governments of Switzerland and the United Kingdom, under IFC's Technical Assistance and Trust Funds Program, helped make possible the project appraisal and will be further utilized for training the company's work force.
IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
