Washington D.C., June 25, 2001
─The International Finance Corporation (IFC), Nissho Iwai Corporation and the Export-Import Bank of Thailand, today signed an agreement to reschedule US$142 million outstanding of the senior loans provided to Morning Star Cement Limited (MSC) for the construction of a greenfield cement project in Vietnam. This rescheduling is part of the largest private sector restructuring in Vietnam, which also includes the conversion of $67 million of shareholders loans to equity, as well as an expansion of MSC’s cement capacity to 1.9 million tons per year and improvements to its distribution system to make it more efficient.
Present at the signing were representatives of MSC’s two joint venture partners─Holcim Ltd (formerly Holderbank FinanciÞre Glaris Ltd) of Switzerland, and Ha Tien I Cement Company, a wholly-owned subsidiary of the Vietnam National Cement Corporation. Holcim is one of the largest and most experienced cement manufacturers in the world.
ôAt its signing in 1995, Morning Star was the largest private sector investment project to have been undertaken in Vietnam and a pioneer project financing involving only limited-recourse to the sponsors and no government guarantees,ö said Mr. Kip Thompson, Principal Investment Officer in IFC’s East Asia and Pacific Division, ôand the successful restructuring of this project when it encountered financial difficulties is evidence of the confidence the Lenders and the JV Partners have in its long term viability.ö
Mr Hugentobler, MSC’s Chairman, also noted that ôthe restructuring was successful because there was fair burden-sharing among the JV partners and the Lenders.ö
Mr. Deepak C. Khanna, IFC’s Country Manager said that “the successful restructuring of this key investment with the active support of various government agencies will enable IFC to move the private sector agenda forward─IFC currently has an exposure of $280 million in 10 companies in Vietnam.ö
Mr Anh, Ha Tien’s General Director, added that ôsuch a major JV restructuring should strengthen foreign investors’ confidence in the investment climate in Vietnam.ö
Mr. Javed Hamid, IFC Director for East Asia and Pacific, said that the restructuring package will help an intrinsically competitive company to better withstand future economic cycles in the Vietnamese cement industry. He also noted that the transaction would have an important demonstration effect for other Vietnamese projects, many of whom have strong business prospects but are constrained by high leverage and liquidity problems.
The mission of IFC, part of the World Bank Group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people’ 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.
