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IFC and Embraer Sign $180 Million Syndicated Loan Financing For New Aircraft Launch Program


Contact:
In Washington:

Ann Pasco

Phone: +1(202) 473 9167

Email:
apasco@ifc.org



Paris, June 15, 2005 — The International Finance Corporation, the private sector arm of the World Bank Group, today signed an agreement to provide a $180 million long-term financing package to Empresa Brasileira de Aeronáutica S.A. (Embraer). The financing consists of a $35 million loan for IFC’s own account and a syndicated loan of $145 million.  IFC’s financing will partially fund the end-stage launch program for the new Embraer 170/190 family of aircraft.

Embraer, one of the world’s largest aviation manufacturers, is listed publicly on the BOVESPA (São Paulo exchange) and the New York Stock Exchange.  Over the past 10 years, the success of the company’s ERJ 145 program of 50-passenger commercial jets has enabled Embraer to consolidate its position.  The development and launch of its new 170/190 jet family represent a strategic extension of its product line into the 70-115 seat segment of the commercial airplane market.  With a range of 3,889 kilometers, the aircraft is capable of operations on such routes as Paris to Moscow, Brasilia to Caracas, and Hong Kong to New Delhi.  

This financing will provide Embraer with a new, reliable source of funding while addressing the need for long-term finance in a capital-intensive industry, where the cycle from initial market research to research and development to full-scale production is about 10 years, longer than in almost any other industry.

The syndicated loan portion was originally for $100 million but was significantly oversubscribed during syndication and increased to $145 million.  Funds are being provided by a number of banks, including BBVA, BSCH, ABN AMRO, JP Morgan, Societe Generale, ING, Banco Itau Europa, Caixa Geral de Depositos, Natexis, and HVB.


Dimitris Tsitsiragos, IFC’s Director for Global Manufacturing and Services, said, “This investment with Embraer is consistent with IFC’s strategic aim to partner with emerging global players from developing countries and to support a sector that brings high value-added engineering and manufacturing to emerging market countries.”


Mauricio Botelho, Embraer’s President and CEO, said, “There are five main pillars in the aeronautical industry.  Capital intensiveness is one of the most important.  Embraer welcomes this loan and sees it as a confirmation of IFC’s mission to support companies in emerging countries.”


Atul Mehta, IFC’s Director for Latin America and the Caribbean, noted IFC’s commitment to investing in Brazil: “This transaction has allowed Embraer to establish the longest syndicated loan tenor for a corporate borrower domiciled in Brazil in many years. The longer tenor is crucial to meeting the company's product development and production cycle and to helping it compete more effectively in the global marketplace.”  


Embraer-Empresa Brasileira de Aeronáutica S.A. is a major global aerospace company with 33 years of experience in designing, developing, manufacturing, selling, and providing after-sales support to aircraft for the airline, defense, and corporate markets. With headquarters in São José dos Campos in the state of São Paulo, and offices and customer service bases in Australia, China, France, Singapore, and the United States, the company had a total workforce of 14,658 people as of December 31, 2004. Embraer is among Brazil’s leading exporting companies: at the end of 2004, its firm orders totaled $10.1 billion.


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.