SEOUL, KOREA, June 8, 1999 --- The International Finance Corporation will invest up to US$15 million in Iljin Industries Co., Ltd., a Korean manufacturer of high voltage power cables to undertake a financial restructuring.
Iljin, one of three Korean cable makers with VCV (vertical continuous vulcanizing) technology, has made the market more competitive and offered an alternative supply at lower cost. Restructuring of the company will support competition and help the main customers, including the Korea Electric Power Company, to lower its capital and operating costs.
Iljin, which began commercial operations in 1997, faced curtailed demand during the Asian financial crisis in 1998. With IFC's investment, Iljin will strengthen its capital base, reduce short-term debt, and improve profitability. IFC has also advised Iljin on working capital management, cost control, and business planning.
Mr. Javed Hamid, IFC Director for East Asia and the Pacific said that, despite the recovery in the overall economic and business environment in Korea in recent months, medium-sized unlisted Korean companies still find it difficult to obtain equity and quasi-equity funds. IFC's investment will stimulate interest among international and domestic long-term investors to invest in such companies. Mr. Hamid added that IFC's technical advisory and supervision activities will also improve Iljin's corporate governance and business planning.
The Iljin Group, founded in 1968, consists of eleven companies active in industrial materials, power and telecom cables, copper foils, and industrial diamond manufacturing. The current shareholders of Iljin Industries are Chairman Chin-Kyu Huh, Iljin Electric Co. Ltd., and Iljin Corporation.
The proposed financial restructuring will involve total funding of $23.7 million. IFC's investment consists of $6 million in equity and $9 million in convertible notes for IFC's own account.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries which will reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.
