WASHINGTON, D.C., Oct. 26 -- Mr. Jannik Lindbaek, Executive Vice President of the International Finance Corporation (IFC) announced three new investments in China today. NANJING KUMHO TIRE CO., LTD. IFC will invest up to US$65 million in a tire project being undertaken by Nanjing Kumho Tire Co., Ltd. The tire manufacturing plant will be located in Nanjing, Jiangsu Province. This is one of the first major investments in China by a world class tire producer, and will help support the development of a competitive world scale framework for this industry. Nanjing Kumho Tire Co., Ltd. will be a joint venture between the Kumho Group of Korea and Nanjing Tyre Factory of China. It will have a production capacity of 2.4 million radial tires and 600,000 bias tires per annum, which will be used in the domestic market for passenger cars, light and heavy trucks, and buses. IFC's financing consists of a loan of up to US$16 million and an equity investment of about US$3.8 million. In addition, IFC will syndicate a loan with
international financial institutions for up to US$45.5 million. The total cost of the project amounts to about US$119 million. "This investment is part of our strategy to introduce major international investors into China and gives IFC the opportunity to work with a strong Korean investor in its first manufacturing project in China," said Mr. Jannik Lindbaek. The project supports the Government's plan to reform state-owned enterprises. The existing state-owned enterprise will become a major shareholder in the new joint venture. The project is also consistent with the Government's aim to give special priority to the automotive sector and to increased local content in domestically produced cars and trucks. (More) IFC Press Release No. 96/42 Page 2 of 3 In addition, the project establishes a precedent for project financing in China by Korean banks. Korean Long Term Credit Bank, an IFC investee company, is working with IFC and is underwriting the loan syndication. DUPONT SUZHOU POLYESTER CO. LTD. IFC will provide
a financing package of US$80.7 million for DuPont Suzhou Polyester Co. Ltd., to build a greenfield polyester chip and filament yarn plant, primarily for the Chinese textile market. Located in Suzhou, Jiangsu Province, the plant is expected to begin operations in mid-1997. The capacity will be 66,000 metric tons per annum. Other investors in the project are DuPont China Holding Company Limited, a Chinese subsidiary of DuPont, one of the world's largest chemical companies and fiber producers; Mitsubishi Corporation of Japan; Chemtex International Inc., a U.S.-based subsidiary of Mitsubishi; and Suzhou Chemical Fibre Plant, the local Chinese sponsor. IFC's financing package consists of a loan of up to US$24.9 million for its own account, an equity investment of up to US$3.8 million, and a syndicated loan of up to US$52 million for the account of participating financial institutions. A total of 15 banks are involved in the syndicated loan. IFC played a key role in the syndication, which represents the Corporatio
n's largest project finance syndication in China to date. "By promoting the transfer of leading technology and management techniques, the project will have a favorable developmental impact on China's textile industry. The project is also in line with the Government's objective to expand and modernize the polyester industry which it sees as the best way to keep pace with the country's growing fiber consumption," said Mr. Jannik Lindbaek. WEIHAI WEIDONGRI COMPREHENSIVE FOODSTUFF COMPANY LIMITED IFC will provide a financing package of U$13 million to the Weihai Weidongri Comprehensive Foodstuff Company Limited, to finance one of the largest new plants in the consumer-ready frozen food sector in China. IFC's investment will help to build a food processing and freezing plant to prepare, package, and store frozen and pre-cooked food products. The plant will be located in the Weihai Economic and Technical Development Zone in Shandong Province, China. IFC's financing package consists of a US$5.5 million loan for its
own account and an equity investment of up to US$1 million. In addition, IFC will raise money from international financial institutions through a syndicated loan of up to US$6.5 million. The estimated cost of the project is US$20 million and the plant is scheduled to begin operations by the end of 1995. IFC Press Release No. 96/42 Page 3 of 3 The Weihai Weidongri Comprehensive Foodstuff Company Limited is a joint venture between Katokichi Co., Ltd., one of Japan's leading producers of frozen food; Hokushu Shokuhin Co., Ltd., a Japanese food and fish trading company; Dong Won Fisheries Co., Ltd., a fishing company in Korea; and the Weihai Economic and Technical Development Zone. The increasing demand for high value-added, ready-to-cook and ready-to-eat products in Japan and East Asia, combined with increased Japanese production costs, led the three foreign investors to join forces and develop a large scale green field plant in China together with the Chinese partner. "The project will introduce modern food pro
cessing and preservation technologies to China and is expected to create significant economic benefits by adding value to local agricultural and marine products and reducing losses of local production through the provision of high quality inputs and technical assistance," said Mr. Jannik Lindbaek. IFC is a member of the World Bank Group and is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
