Washington, D.C., August 4, 2005
— The International Finance Corporation, the private sector arm of the World Bank Group, has signed an agreement to provide a $25 million guarantee that helps Packages Limited, Pakistan’s leading integrated manufacturer of pulp, paper, and packaging, secure rupee-denominated borrowings from a local bank.
The company is one of the global leaders in a new straw-based pulping technology. As this technology is further refined, it may become an important factor in establishing greater environmental sustainability in countries with limited wood resources. The overall financing package will support a $250 million investment program that includes expansion and relocation of the company’s pulp and paper facilities from Lahore to a location 70 km away. The project will help Packages improve operating efficiency, product quality, and its overall environmental performance.
IFC’s partial guarantee facility, the first of its kind in Pakistan, will guarantee parts of local long-term bank borrowings and part of the company’s PKR 10.5 billion (approximately $176 million) syndicated term financing.
Packages’ investment program is essential for the company to retain its position as a leader in its key markets and to facilitate its strategic move into the higher-margin market for writing and printing paper. With the new and relocated facilities, the company’s annual production capacity will increase from about 100,000 to over 300,000 tons, meeting its capacity requirements for the next decade.
Dimitris Tsitsiragos, IFC’s Director Global Manufacturing and Services Department, said, “IFC‘s partial guarantee will support one of the largest-ever local currency syndicate financings to be raised by a Pakistani corporation. The transaction will help the company better position itself as a leader in the packaging market, and it will open up new opportunities in the strategically important writing and printing paper segment.”
Michael Essex, IFC's Acting Director for the Middle East and North Africa, added, "We have had an excellent relationship with Packages for over 40 years, and we are pleased to be able to support the company in this largest expansion project to date.”
Syed Babar Ali, Advisor to Packages, said, “We appreciate IFC’s continuing financial, technical, and strategic role in this transaction, and its overall support of Packages Limited”.
The mission of IFC (
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 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
