SEOUL, KOREA, November 13, 1998 --- As part of its response to the current economic crisis, the International Finance Corporation will help a leading brass manufacturer in Korea to restructure by investing up to US$32 million in Dae Chang Industrial Co. Ltd
Dae Chang has production capacity of 90,000 tons per year and supplies about one-third of the Korean market. The company nearly doubled export sales in 1998 compared to the previous year. As a result of the financial and operational restructuring, the company expects to be in a much stronger position to take advantage of the expected recovery in domestic demand, which has dropped significantly during the economic crisis, and to increase its competitiveness in export markets. Since the company's manufacturing process is based on materials recycling, its increased production will further benefit the Korean economy by promoting resource conservation.
Dae Chang is owned by the Cho family of Korea, domestic portfolio investors, and public shareholders. The Cho family has specialized in brass manufacturing for about a quarter-century and helped the company attain industry leadership.
IFC today signed agreements for loans of up to $25 million and an equity investment of up to Korean Won 10 billion (approximately $7 million) for IFC's own account. IFC is helping the company attract an additional $4 million in foreign direct investment.
The restructuring, at a total cost of $60.3 million, will help the company meet increased working capital requirements brought about by the difficult economic environment and fund product development to support exports. IFC has helped the sponsors develop the restructuring plan, which includes new approaches to the efficient management of working capital.
Mr. Javed Hamid, IFC's Director for East Asia and the Pacific, said that the restructuring would strengthen the company's viability and increase operating efficiency. He predicted that it would also increase business confidence in Korea, especially for foreign investors seeking opportunities in similar companies -- a key to Korea's long-term recovery.
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.
