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Washington, D.C., July 3, 2003
—The International Finance Corporation, the private sector arm of the World Bank Group, has agreed to provide two loans to support the rehabilitation of palm oil plantations in Indonesia. The transactions allow IFC to support a sector that generates much employment but strongly needs financial assistance to contribute to economic stability in the country.
IFC agreed to provide a $14 million loan to Verdaine Investment Limited, an investment vehicle created to acquire, rehabilitate, and further develop Indonesian palm oil plantations. IFC also agreed to provide a $12 million loan to P.T. Sahabat Mewah Dan Makmur, a 12,000 hectare oil palm plantation acquired by Verdaine in February 2003.
Verdaine was created in June 2000 with $100 million in committed equity from Austindo Nusantara Jaya, Olympus Capital Holdings Asia and JP Morgan Partners Asia. Verdaine aims to acquire, rehabilitate and manage 40,000 to 50,000 hectares of palm oil plantations. Verdaine's primary acquisition targets are plantations in Indonesia with potential for strong cash flow and further growth prospects if rehabilitated.
“IFC believes that the fundamentals of the palm oil industry in Indonesia are sound. In these transactions we are able to work with a strong and reliable operator to facilitate its growth across Indonesia,” said Jean-Paul Pinard, IFC director of agribusiness. He added, “Through these investments, we expect to build long-term partnerships with private business groups that have demonstrated commitment to sustainable development and improving corporate governance.”
”The renewed involvement of IFC in funding projects in Indonesia sends a very positive message to companies with a commitment to good corporate governance, sustainable development, and the creation of employment opportunities for the Indonesian people. IFC is the right partner for Verdaine because of these shared values,” said Kelly Knight, a director of Verdaine. She added, “The palm oil palm business is one of Indonesia’s most important generators of employment and dollar export earnings. It is a business where Indonesia has strong competitive advantage but where there is a great need for improvement in corporate governance.”
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
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