SEOUL, KOREA, October 29, 1998 --- The International Finance Corporation today signed a US$48 million agreement with Shinmoorim Paper Manufacturing Co., Ltd. for an investment that it hopes will encourage other companies to restructure to respond to the economic crisis.
The investment will allow Shinmoorim, a leading producer and exporter of high-quality coated paper, to restructure its balance sheet. As part of the restructuring, Shinmoorim has taken extensive steps to bring corporate practices in line with leading international companies. The company has substantially reduced its debt burden, eliminated major cross-guarantees, and consolidated affiliate companies. It has also committed to disclose financial statements in accordance with International Accounting Standards and to add outside directors to their Board.
The investment will also support completion of a $230 million expansion that will double Shinmoorim's production to 375,000 metric tonnes per year and introduce state-of-the-art equipment and technology from around the world.
Mr. Javed Hamid, IFC Director for East Asia and the Pacific expressed hope that the Shinmoorim transaction would serve as a model for financial restructuring, which IFC considers a key for companies to survive the worst effects of the Asian economic crisis. Shinmoorim's success in building a strong financial base means that it is now positioned to become one of Asia's leading coated paper producers, he added.
IFC's $48 million investment in Shinmoorim includes $12 million in equity and $17 million in convertible notes. In addition, the AIG Asia Infrastructure Fund II committed $37 million, the Dong Wook Lee family committed KW18 billion ($13.6 million) and the Netherlands Development Finance Company (FMO) committed $5 million. The Korean Development Bank (KDB) and other Korean lenders have also participated in the restructuring by providing long-term debt financing.
Shinmoorim was established in 1978 and was listed on the Korean Stock Exchange in 1990. The Company is controlled and managed by the Dong Wook Lee family. Its production facilities are located in Chinju, Korea.
IFC, part of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
