WASHINGTON, D.C., Oct. 16--On September
25, 1996, the International Finance Corporation (IFC) signed an agreement
for a US$155 million financing package with GIRSA, S.A. de C.V. (GIRSA),
the chemical products subsidiary of DESC, S.A. de C.V., a diversified holding
company headquartered in Mexico. IFC's investment supports a capital expenditure
program designed to improve GIRSA's competitiveness and minimize the environmental
impact of the company's operations.
IFC's financing will help to modernize a major industrial company, whose
operations are critical to several major segments of the domestic economy,
by improving its access to the international loan and institutional investor
markets. The IFC package consists of two loans for its own account: an
eight-year US$30 million term loan and a ten-year US$10 million income-participating
loan, and two loans for the account of participants, comprising a seven-year
US$40 million syndicated loan and a three-year US$75 million U.S. commercial
paper (USCP) facility. The USCP facility is supported by a syndicated letter
of credit provided by SociÈtÈ GÈnÈrale. Citicorp acted as co-arranger of
the letter of credit portion of the syndication.
The investment will secure significant environmental gains. The program
will consolidate production outside heavily populated areas and involve
the use of innovative technology to recycle waste heat to increase energy
efficiency. The construction of new facilities will minimize the inland
transport of hazardous chemicals and help reduce air pollution. As Mr.
Jean-Paul Pinard, Acting Director of IFC's Chemicals and Petrochemicals
department, noted, "The liberalization of Mexico's economy and the
opening up of its markets under NAFTA is providing Mexican companies with
a strong impetus to strengthen their international competitiveness. GIRSA's
capital expenditure program is designed to achieve such ends while also
enhancing its environmental performance."
The chief executive officer of GIRSA, Mr. Enrique Ochoa Vega, added that
"GIRSA's close association with IFC during this complicated transaction
and IFC's partnership with major financial institutions provided GIRSA
with a comprehensive financial package well-suited to our needs."
Mr. Pinard also observed that IFC's role in this project "is consistent
with IFC's strategy of providing private corporate access to medium and
long-term financing by tapping new markets."
IFC, a member of the World Bank Group, is the leading multilateral source
of equity and loan financing for private sector projects in developing