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IFC’s post-financial crisis support of Turkish private sector tops $160 million
Istanbul/Washington, D.C., January 25, 2002—
The International Finance Corporation, the private sector arm of the World Bank, continues its post-financial crisis support for Turkey’s private sector with a US$4 million loan to Soktas, a leading Turkish fabrics manufacturer. The IFC loan will support the company’s efforts to increase export revenues and replenish working capital.
The loan to Soktas marks IFC’s fifth Turkey investment in less than a year. Since April 2001, IFC has invested more than $160 million in a wide range of companies to help weather the current economic difficulties. The investments have been aimed at boosting export revenues, improving efficiency, expanding production, and replenishing working capital.
Mr. Khosrow Zamani, IFC’s Director for Southern Europe and Central Asia said, “IFC’s loan to Soktas reflects our continued commitment to the Turkish private sector at a critical moment of need. We believe that efficient manufacturing companies like Soktas play a critical role in the long-term health of the Turkish economy. A healthy and vibrant private sector is a key engine for sustainable job creation and economic growth.”
Mr. Zamani also noted that the devaluation of Turkey’s currency has made its exports more attractive on international markets. “By providing timely export financing, IFC will help Soktas seize current market opportunities,” he added.
Turkey’s recent financial crisis dampened domestic demand for the products of manufacturing companies like Soktas. As a result, many Turkish manufacturing firms have looked to increase export revenues to make up for lower domestic demand. By the end of 2001, 70% of Soktas’ sales came from exports, primarily of fabric for color-woven shirting. In the year 2000, 40% of sales were generated from exports.
Export-oriented businesses typically need higher working capital requirements and longer-term debt financing than currently available from local and foreign banks. Ms. Sujata Lamba, IFC’s Istanbul-based Turkey Country Manager, said: “Our financing to Soktas fills a critical need for long-term financing of Turkish businesses, which are currently entirely dependent on short-term debt. It is imperative that Turkish companies weather the current round of economic difficulties and emerge stronger in the long-term.”
The IFC loan to Soktas marks the second time in five years that IFC has extended a loan to the company. In 1997, IFC provided the Company a loan of DM22.8 million to help with its expansion and modernization project.
“Soktas represents an important aspect of Turkey’s economy,” Ms. Lamba said. “We are pleased to continue our involvement with Soktas as they have high corporate standards with regards to transparency and international environmental principles. They are a highly-regarded manufacturer serving worldwide brands, which ensures a steady flow of foreign exchange back into the country.”
Soktas Pamuk ve Tarim Urunlerini Degerlendirme Ticaret ve Sanyii AS (Soktas) was established in 1971 as a cotton yarn spinner and has evolved to an internationally respected textile mill. The Company mainly produces fine-count yarn dyed fabric for shirting, and piece-dyed fabric for sportswear. Though a family-owned company, part of Soktas’ shares (24.5%) trade on the Istanbul stock exchange.
Turkey is an important country for IFC, the fourth largest exposure accounting for about 4.5% of IFC’s global portfolio. IFC’s held portfolio, including amounts mobilized from commercial banks, is close to $1 billion. IFC’s program for Turkey continues to be active with investments in projects of about $400 million.
IFC’s mission 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, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC's committed portfolio at the end of FY01 was $14.3 billion.
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