Beijing, June 16, 2004—The International
Finance Corporation, the private sector arm of the World Bank Group, announced
today that it will provide a $43 million financial package to the
Fenglin Group for the construction and operation of a plant producing medium-density
fiberboard (MDF) and related value-added MDF products. IFC is providing
$25 million in equity and loan for its own account and is arranging an
$18 million syndicated loan to be provided by International Finance Participation
Trust, of Canada, and Unicredito Italiano S.p.A. of Italy.
Fenglin is one of the largest MDF manufacturers
As part of its relationship with Fenglin, IFC will be recommending corporate
governance improvements to Fenglin and offering technical assistance to
help the company achieve sustainable forestry practices, such as wood certification.
The IFC financing and advisory support is designed to assist Fenglin with
its expansion program and position it to access domestic and international
capital markets in the future.
“This investment is IFC’s first project in Guangxi Province. It
demonstrates that viable investment opportunities exist in China’s poorer
interior regions. The project supports job creation in the city of Baise,
through both manufacturing and the forestry business,” said Javed Hamid,
IFC director for East Asia and the Pacific. “It has strong job creation
and poverty alleviation characteristics. The use of plantation forestry
and IFC’s proposed wood certification initiative will support the Chinese
government’s strong focus on sustainable forestry” said Richard Ranken,
IFC’s Director for Global Manufacturing and Services Department.
Mr. Liu Yichuan, Chairman of Fenglin, said: “This project is expected
to create at least 2,000 jobs for the city of Baise, contribute RMB 400-500
million to the local GDP and generate over RMB 10 million of local income
annually. IFC sets up good examples for investors, the public sector
and financial institutions in China through its investment concepts and
operational procedures in this project. With the assistance of IFC, Fenglin
Group is entering into a new historical phase from a privately held company
to a public company with diversified ownership”
The Fenglin Group consists of Fenglin International Limited, the holding
company incorporated in the British Virgin Islands and
two foreign-owned Chinese companies; Guangxi
Baise Fenglin Fiberboard Corporation Limited, a new company formed to implement
this project; and Guangxi Fenglin Forestry Development Corporation Limited,
an existing MDF producer and forestry developer.
Since 1985, IFC has financed $1.5 billion in more than 70 projects in China
. 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 FY03, IFC has committed more than $37
billion of its own funds and arranged $22 billion in syndications for 2,990
companies in 140 developing countries. IFC's worldwide committed portfolio
as of FY03 was $16.8 billion for its own account and $6.6 billion held
for participants in loan syndications.