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WASHINGTON, D.C., June 27 -- The International Finance Corporation (IFC) has approved US$100 million in loan financing for the Hungarian Telecommunications Company Ltd. (Matáv), the first telecommunications company to be partially privatized in Central and Eastern Europe.
The loan will be used to finance Matáv's investment program of about US$ 1 billion, which will expand and improve the quality of Hungary's telecommunications network. Matáv plans to add 619,000 new telephone lines, while 200,000 existing lines will be upgraded. Matáv will also establish new operating systems and increase its digital capability.
IFC's loan is part of a US$300 million multi-currency syndicated loan for Matáv which IFC is arranging together with Deutsche Bank and the European Bank for Reconstruction and Development (EBRD). IFC is providing a US$50 million loan for its own account and will syndicate another US$50 million with international commercial banks. The EBRD will provide an identical financing package of US$100 million while another US$100 million will be raised as parallel loans. The transaction is currently being syndicated in the market and has been fully underwritten by Credit Suisse, Deutsche Bank, J.P. Morgan, NatWest Markets, and Sumitomo Bank.
In 1993, Matáv was partially privatized when the Government of Hungary sold about 30 percent of its shares to MagyarCom, a consortium owned by Deutsche Bundespost Telekom of Germany and Ameritech International of the United States. IFC invested in Matáv in 1993 to assist in the privatization of the company. To date, IFC has approved over US$180 million in loans and equity investments for the Hungarian telecommunications sector, in addition to investments in two regional financing vehicles.
"Hungary is among the leaders of liberalization and privatization of the telecommunications sector throughout all of Europe and IFC is pleased to help Matáv realize the benefits of its privatization," stated Mr. Everett J. Santos, Director of IFC's Infrastructure Department. "The investment program, partly financed by the syndicated loan, will help Matáv increase substantially the size of its network as well as upgrade the range and quality of telecommunication services that it can provide," he added.
IFC is a member of the World Bank Group and is the leading multilateral source of equity and loan finance for private sector projects in the developing world.