Press Releases

IFC Boosts Turkish Private Sector with $10 Million Loan to Key Manufacturer

IFC, Washington D.C.:
Afshin Molavi

Phone:  (202) 458-5674

Fax:  (202) 974-4384


IFC, Istanbul:

Dilara Mine Cuhruk

Phone:  (90-212) 282-4001

Fax:  (90-212) 282-4002


* IFC’s Post-Financial Crisis Support for Turkey Nears $340 Million

Washington D.C., May 21, 2001
—The International Finance Corporation, the private sector development arm of the World Bank, will support a key Turkish packaging materials manufacturer with a US$10 million loan to help the company overcome its working capital shortages, which are accentuated by the fall in domestic demand caused by Turkey’s recent financial crisis.

The IFC investment in Modern Karton will help finance the working capital needs of the company as it seeks to achieve full capacity utilization and boost exports to make up for the reduction in domestic demand.  Modern Karton is one of the key private sector producers of corrugating packaging materials in Turkey, with the third largest capacity in Europe. Modern Karton’s plant is located in Corlu, 180 km west of Istanbul, where it has easy access to raw materials, power and energy resources, and transportation facilities.

“The IFC investment in Modern Karton, a large employer and well-regarded company, reflects our goal of supporting key private sector companies to help them recover from the recent financial crisis,” said Khosrow Zamani, IFC’s Director for Southern Europe and Central Asia. “Companies like Modern Karton need to remain strong for Turkey’s economy to recover fully.”

The investment marks IFC’s second in the company.  In 1998, IFC made a $30 million loan to the company for its capacity expansion program.  From 1998-2000, the company successfully raised its capacity from 90,000 tons p.a to 290,000 tons p.a.  The company expects to reach full capacity utilization within the next two years, enabling it to export up to $30 million a year.

Modern Karton has traditionally relied on long-term finance for its working capital needs.  “However, loan maturities exceeding even a one year range are currently not readily available on the Turkish market,” said Sujata Lamba, IFC’s Country Manager for Turkey. “Companies that seek to boost exports and maintain stable financing sources require longer maturity loans.”

“The investment in Modern Karton will create new employment in the paper plant, increase waste paper recycling, improve energy efficiency through co-generation, disseminate modern technologies and advancements in paper-making, and support the industrial packaging sector at a time of curtailed domestic demand,” Lamba said.  “We are pleased to continue working with Modern Karton, and bolster the private sector as it attempts to offset domestic recession,” she added.

Modern Karton is majority owned by the Eren Group, a diversified, family-owned company.  The Eren Group has eleven companies in textiles, cement and paper sectors, a joint venture in Germany for import/export activities, and a cogeneration plant in Corlu, adjacent to Modern Karton.  The Eren Group is headquartered in Istanbul.

The IFC investment marks the Corporation’s eighth Turkey investment in less than a year.  Since April 2001, IFC has invested nearly $340 million in a wide range of companies and financial institutions to help weather the current economic difficulties.  The investments have been aimed at boosting export revenues, improving efficiency, expanding production, and replenishing working capital.

“Turkey’s private sector has shown a substantial amount of resilience in the past few months,” Mr Zamani said.  “We feel that our role will continue to grow as the corporate sector in Turkey embarks on a growth plan,” he added.

Turkey is an important country for IFC, the fourth largest exposure accounting for about 4.5 percent of IFC’s global portfolio.  IFC’s held portfolio, including amounts mobilized from commercial banks, is close to $1 billion.  

IFC’s mission 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, and provides technical assistance and advice to governments and businesses.  Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries.  IFC’s committed portfolio at the end of FY01 was $14.3 billion.