Washington, D.C., July 28, 2003 -
The International Finance Corporation, the private sector arm of the World Bank Group, has rescheduled $43.6 million of $64.9 million in total outstanding loans provided to Ipiranga Petroquimica S.A. (IPQ), Brazil. The rescheduling of IFC’s loans includes an A-loan for IFC’s own account and a B-loan for the account of participating banks. In addition, Kreditanstalt fur Wiederaufbau (KfW), the German development bank, and its affiliate, Deutsche Investitions und Entwicklungsgesellschaft (DEG), have, in coordination with IFC, rescheduled $33.3 million of a total of $70.0 million in outstanding loans.
These reschedulings and the R$350 million equity injection by the Ipiranga Group are part of the company’s efforts to restructure its short- and long-term debt, totaling about $550 million at the end of 2002. The company will reduce its debt by about US$100 million and lower its interest expenses significantly.
Weak petrochemical market conditions worldwide since 2000 have depressed the company’s profit margins, and the financial crisis in Brazil in mid-2002 had worsened its liquidity. The company, a leading Brazilian petrochemical producer, operates four polyethylene plants and a polypropylene facility in the Triunfo petrochemical complex, located in the state of Rio Grande do Sul. A recent expansion project increased the company’s polyethylene and polypropylene production capacities by 150,000 tons each per annum. It was funded on a project finance basis with long-term debt provided by IFC, a syndicate of banks participating in IFC’s B-loan program, and KfW. The rescheduling will help the company survive the difficult conditions in the industry and in Brazil.
This operation makes an important contribution to the economy in the Rio Grande do Sul state and in the country. Petrochemicals is one of Brazil’s main industrial outputs. In 2001 Brazil became the leading producer of petrochemical products in Latin America.
Mr. Rashad Kaldany, IFC director for oil, gas, mining and chemicals, said, “We are happy to assist a long-standing client in Brazil in difficult times. The strong commitment of the Ipiranga Group to the long-term survival of the company and the confidence of the project lenders in the group’s business prospects contributed significantly to the successful closure of this rescheduling.”
Ms. Mary Elizabeth Ward, IFC’s manager for resource mobilization said: "The banks in the IFC B-loan were unanimous in their support for this rescheduling. We believe the rescheduling demonstrates that an appropriate transactional structure can encourage lenders to support Brazilian companies in a challenging environment.”
IFC's mission (
www.ifc.org
) 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, 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 committed portfolio at the end of FY02 was $15.1 billion with an additional $6.5 billion held for participants in loan syndications.
