BELISCE, CROATIA, March 24—The International Finance Corporation (IFC) signed an agreement in Croatia today to provide loans and equity for a major modernization and rehabilitation of Belisce d.d., the leading packaging paper and packaging materials producer in Croatia. Belisce has been in the wood processing business since 1884 and, for the last 36 years, has produced and sold packaging paper and corrugated products.
This DM74.7 million (about US$42.2 million equivalent) project is designed to strengthen Belisce’s international competitiveness and address its existing production problems, which are the result of relatively old equipment and war damage to the plant. Belisce will be able to broaden its product range by introducing new grades of packaging paper, such as, wastepaper-based fluting, testliner and new types of packaging products. It will also reduce operating costs by increasing productivity and decreasing the consumption of energy; significantly improve environmental aspects of the operations; and strengthen the company’s shareholder structure to ensure a smoother transition from state-owned enterprise to private ownership.
Mr. Harold Rosen, IFC’s Director for Central and Southern Europe said that the project would help to modernize and rebuild the company, which suffered significant wartime damage, as well as safeguard the jobs of 2,300 workers in a region where Belisce is a key employer. The syndicated portion of the loan is also likely to attract more foreign direct investment and long-term financing to Croatia. In addition, the project will help to increase foreign exchange earnings from export sales, which account for more than two-thirds of the company’s total revenue.
IFC’s financing package consists of a loan of up to DM25 million (about US$14.1 million equivalent) for IFC’s own account and a loan of up to DM25 million (about US$14.1 million equivalent) for the account of participants, as well as an equity investment of up to DM11 million (about US$6.2 million equivalent).
IFC has had a long-standing relationship with Belisce, whose management team is both technically and commercially capable. The Corporation financed major expansion projects of the company in 1973 and in 1980. Both projects were successfully completed and loans fully repaid despite wartime conditions that caused loss of life as well as significant damage to the Belisce plant.
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.
