L. Joseph


WASHINGTON, D.C., June 30, 1993 -- The International Finance Corporation (IFC) has arranged a $135 million financing package for Pilipinas Shell Petroleum Corporation (PSPC) to construct and operate a $667 million oil refinery at Tabangao in the Philippines. The project, located about 75 miles south of Manila in Batangas, consists of the construction of new process units with capacity of 110,000 barrels per day (bpd) next to the company's existing 72,000 bpd refinery, which will be decommissioned.

The project is one of the largest single investments ever undertaken by the private sector in the Philippines and indicates long term confidence in both the country and the company on the part of international and local investors. Site development is well underway at Tabangao in order to be ready for the planned start-up in the third quarter of 1994. The refinery will produce unleaded gasoline and other low sulphur fuels. It is designed to manufacture a wider range of products than the old refinery and to be more energy and process efficient. It will meet strict World Bank and local environmental guidelines. Production is expected to be sold primarily in the Philippines.

The $135 million loan by IFC consists of a senior portion of $120 million and a subordinated portion of $15 million. Of the senior portion, $85 million will be provided through loan participations syndicated with 17 commercial banks and the balance of $35 million is for IFC's account. Banque Indosuez, Citibank, N.A. and ING Bank (the Co-Arrangers) together with ANZ Banking Group Limited, BHF-BANK, and The Mitsubishi Bank, Limited underwrote the $85 million portion of the IFC financing. A list of all banks participating in the IFC loan is attached.

Additional financing for the project in the amount of $85 million is being provided by a syndicate of the same 17 commercial banks on the attached list with political risk guarantee cover provided by the Export-Import Bank of the United States. Citibank, N.A. is the agent for this facility with the same co-arranging/underwriting banks mentioned above.

Other overseas financing for the project will come from Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG): DM20 million and the Philippine National Bank: $20 million.

These off-shore funds will be supplemented by financing of another $67 million in loans from the Far East Bank and Trust Company ($20 million) and a syndicate of nine Philippine commercial banks ($47 million) led by the Bank of the Philippine Islands. In addition to the Far East Bank and Trust Company, the Bank of the Philippine Islands, and the Philippine National Bank, the other local banks in the syndicate include Citibank, N.A., CityTrust Banking Corporation, Metropolitan Bank and Trust Company, Philippine Commercial & International Bank, Solidbank Corporation, and the Union Bank of the Philippines. The syndicate will also provide various specialized financial services.

The remaining financing will be in the form of additional equity from PSPC's stockholders ($292 million) and from internal cash generation ($55 million).

Fluor Daniel, Inc. of Irvine, California -- one of the largest engineering firms in the world with considerable experience in refinery construction management -- is undertaking (along with its local Philippine counterpart) project management, design, engineering, materials procurement and construction services.

PSPC is one of the three main petroleum refiners and marketers in the Philippines. It is 32.4 percent owned by over 100 Philippine stockholders with the largest interests being held by The Insular Life Assurance Company Limited and LBC Properties Inc. The 67.6 percent foreign shareholding in PSPC is held by The Shell Petroleum Company Limited, U.K.

IFC is a member of the World Bank Group and is the largest source of equity and loan financing for private sector projects in developing countries.