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WASHINGTON, D.C., Oct. 23--The International Finance Corporation (IFC) has approved US$37.5 million in loan and equity financing in A. Magsaysay Inc., the holding company of Magsaysay Lines Inc., a major inter-island shipping company in the Philippines.
The Philippines relies on efficient shipping services for trade with major markets in Asia, the U.S., and Europe. Expansion of the fleet will lower shipping and trade costs and improve competitiveness. The Philippine economy will also benefit from the project's direct earnings of foreign exchange through international operations.
IFC's financing will enable the company to expand its fleet in the international and regional markets and reduce the age of the existing fleet. This is IFC's first shipping investment in the Philippines and the first to be linked with privately funded and operated training facilities for seamen.
Magsaysay Lines Inc. owns 17 dry cargo vessels, product tankers, and gas carriers engaged in Philippine inter-island and near-sea trades. The expansion program includes the acquisition of secondhand bulk carriers or container ships to be deployed on international and regional trades.
IFC's financing will include a loan for its own account and a loan to be syndicated with international commercial banks to one or more special purpose subsidiaries of A. Magsaysay Inc. In addition, IFC will provide a convertible loan and will make an equity investment in the company.
"We are very pleased to become involved with Magsaysay, which is a growth-oriented company with a sound track record," said Mr. Assaad J. Jabre, Director of IFC's Infrastructure Department, which oversees investments in shipping in developing countries. "The project builds on the measures recently taken by the Government to facilitate private investment in the sector and thus expand and upgrade the country's shipping services and improve their competitiveness."
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.
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