L. Joseph
Phone: (202) 473-7700
Fax: (202) 974-4384
E-mail: ljoseph@ifc.org


WASHINGTON, D.C., May 21, 1999 – The International Finance Corporation will invest $30 million towards the restructuring of United Pulp and Paper Company Inc. (UPPC) – a Philippine joint-venture between the Siam Pulp and Paper Public Company Ltd. (SPPC) of Thailand and the Philippine Investment-Management Consultants, Inc. (PHINMA) Group of the Philippines.
UPPC was established in 1969 and is the leading producer of packaging paper in the Philippines. In November 1998, UPPC commissioned a second paper machine increasing its production from 45,000 to 195,000 tons per year.
UPPC will use the investment to restructure its balance sheet by increasing its equity base, refinancing existing short-term debt, and meeting incremental working capital needs. IFC helped structure the transaction by working closely with UPPC's sponsors to enable them invest a substantial amount of new equity and quasi-equity in the company. IFC also assisted UPPC in approaching its existing lenders to convert a majority of their short-term loans into long-term financing. In part due to a lower overall credit risk and creation of sufficient security through the restructuring, a majority of the existing Philippine lenders, including Far East Bank, PCIBank and Asian Bank, have signaled strong support to the company by extending loan maturities.
Mr. Javed Hamid, IFC Director for East Asia and Pacific, said the restructuring package will improve the financial resiliency of an intrinsically competitive company to better withstand possible future downturns in the paper industry. He also noted that the transaction would have an important demonstration effect for other Thai and Philippine corporates, many of whom have strong business prospects but are constrained by high leverage and liquidity problems. This transaction represented IFC's first new investment with a Thai manufacturing company since the beginning of the Asian economic crisis.
UPPC is operated and managed by professional staff from SPPC and PHINMA. SPPC, one of the largest paper companies in Thailand, is a member of the Siam Cement Group in which IFC made four investments between 1969 and 1980. IFC has also made two investments in PHINMA Group companies between 1992 and 1993.
The mission of IFC, part of the World Bank Group, is to promote private sector investment in developing countries, which will 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 advise to governments and businesses.