WASHINGTON, D.C., Oct. 16--On September 25, 1996, the International Finance Corporation (IFC) signed an agreement for a US$155 million financing package with GIRSA, S.A. de C.V. (GIRSA), the chemical products subsidiary of DESC, S.A. de C.V., a diversified holding company headquartered in Mexico. IFC's investment supports a capital expenditure program designed to improve GIRSA's competitiveness and minimize the environmental impact of the company's operations.
IFC's financing will help to modernize a major industrial company, whose operations are critical to several major segments of the domestic economy, by improving its access to the international loan and institutional investor markets. The IFC package consists of two loans for its own account: an eight-year US$30 million term loan and a ten-year US$10 million income-participating loan, and two loans for the account of participants, comprising a seven-year US$40 million syndicated loan and a three-year US$75 million U.S. commercial paper (USCP) facility. The USCP facility is supported by a syndicated letter of credit provided by SociÈtÈ GÈnÈrale. Citicorp acted as co-arranger of the letter of credit portion of the syndication.
The investment will secure significant environmental gains. The program will consolidate production outside heavily populated areas and involve the use of innovative technology to recycle waste heat to increase energy efficiency. The construction of new facilities will minimize the inland transport of hazardous chemicals and help reduce air pollution. As Mr. Jean-Paul Pinard, Acting Director of IFC's Chemicals and Petrochemicals department, noted, "The liberalization of Mexico's economy and the opening up of its markets under NAFTA is providing Mexican companies with a strong impetus to strengthen their international competitiveness. GIRSA's capital expenditure program is designed to achieve such ends while also enhancing its environmental performance."
The chief executive officer of GIRSA, Mr. Enrique Ochoa Vega, added that "GIRSA's close association with IFC during this complicated transaction and IFC's partnership with major financial institutions provided GIRSA with a comprehensive financial package well-suited to our needs." Mr. Pinard also observed that IFC's role in this project "is consistent with IFC's strategy of providing private corporate access to medium and long-term financing by tapping new markets."
IFC, a member of the World Bank Group, is the leading multilateral source of equity and loan financing for private sector projects in developing countries.
