WASHINGTON, D.C., June 17 -- The International Finance Corp. today announced the signing of a $250 million financing package for Venezuela's largest private company, Compañía Anónima Nacional Teléfonos de Venezuela (CANTV). CANTV is Venezuela's national and international telecommunications carrier, which was partly privatized in 1991 when a 40% shareholding, with management control, was sold to a consortium led by GTE Corporation USA, (51%) Telefónica de España (16%), Electricidad de Caracas (16%) Banco Mercantil Group, Caracas (12%) and Lucent Technologies (5%). IFC's support will allow CANTV to pursue its ongoing modernization and expansion program at a time when Venezuelan private companies would have difficulties in accessing international capital and long term loan markets directly.
The IFC package has three components: 1) a 10-year loan of up to $50 million for IFC's own account; 2) a B loan of $175 million to be syndicated with commercial banks; and 3) a C loan of $25 million for IFC's account.
The B loan has two portions: 1) $100 million of existing three- and four-year CANTV commercial debt to be converted into the eight-year B loan, and 2) $75 million of new money. IFC is currently launching the B loan syndication, and expects to conclude this during the next few weeks.
Between 1991 and 1995 CANTV spent $2.3 billion on modernization and expansion as part of a nine-year program projected to cost a total of $4.2 billion. By the end of 1995 the company had enlarged its network by 50% to 2.46 million lines in service. The proposed IFC financing will support CANTV's expansion and modernization program for 1996 and 1997, which has a total cost of $620 million and includes installation of 658,600 new digital telephone lines, 12,700 new public telephones, expansion of the cellular telephone network, and other important improvements. The balance of financing required is primarily being funded from internal cash flow generation.
"We are pleased to be able to provide this financing to Venezuela's most important privatization to date," said IFC Infrastructure Director, Mr. Assaad Jabre. "The company has already shown a dramatic improvement in service quality since its partial sale to private owners in 1991, and with this financing package we expect CANTV to achieve significant further growth and operating improvements over the next two years. IFC's role as catalyst was crucial in this case, as we are mobilizing new commercial finance for Venezuela's premier private company that would simply not be available without our involvement. "
IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.