IFC Press Release – IFC and Citigroup Arrange $175 Million Financing for Leading Mexican Paper producer, Copamex

Washington D.C., May 18, 2004 -The International Finance Corporation, the private sector arm of the World Bank Group, and Citigroup Inc. have arranged a $175 million financing package to support the corporate restructuring and global debt refinancing of Copamex S.A. de C.V., a leading manufacturer and distributor of paper-based consumer, packaging, printing, and writing products in Mexico and Central America. The financing package includes loans of $75 million for IFC’s own account and a $100 million equivalent multicurrency syndicated facility.

IFC has provided an eight-year, $50 million senior loan to Copamex’s subsidiary, Copamex Productos al Consumidor, S.A. de C.V. (CPG), which is a 50-50 joint venture with Swedish-based SCA Hygiene Products AB, a leading European manufacturer of paper-based consumer products. IFC has also invested an eight-year, $25 million subordinated convertible loan in Copamex.

The six-year, $100 million syndicated facility, which has also been provided to CPG, consists of a $46 million loan for the account of foreign commercial banks participating in IFC’s B-loan program and a $54 million equivalent Mexican peso parallel loan for the account of local commercial banks. The syndicated facility was oversubscribed in the market by $35.5 million. IFC also provided Copamex with currency swaps to hedge the dollar loans back into pesos.

“The long-term local currency loans provided by the financing package, as well as the corporate restructuring that expands the partnership with SCA, will help Copamex put itself on a sustainable path to achieving its potential for growth. We are pleased to be part of this process. IFC will also continue to assist Copamex in its efforts to improve sustainability in its environmental, social, and governance practices,” said Bernard Pasquier, IFC’s director for Latin America and the Caribbean.

“This transaction represented an important part of our debt reduction and overall refinancing plan, which has been successfully completed. We are very pleased with the results of the syndication process and results of the overall refinancing plan,” said Sergio de la Garza, corporate director of Copamex.

He added that the plan entailed a series of transactions: a financing package from the IFC, the syndicated loan arranged by IFC and Citigroup, the sale of 50 percent of the company’s consumer products business, the release of guarantees provided by subsidiaries of Copamex to holders of outstanding long-term local bonds, and the previously announced sale of the company’s multiwall sack business. The plan allowed Copamex to redeem its 11.375 percent senior notes due 2004 and to refinance the rest of its outstanding debt with maturities of up to eight years, and with peso-denominated and peso-equivalent funding to mitigate exchange rate risk.

Rabobank and HSH Nordbank joined the IFC B-loan as coarrangers; International Finance Participation Trust and Norddeutsche Landesbank as lead managers; and State Bank of India as participant.

Banco Nacional de México, S.A., a subsidiary of Grupo Financiero Banamex, a unit of Citigroup, acted as administrative agent for the Mexican peso parallel loan. Other institutions joining the parallel loan include BBVA Bancomer as a coarranger; Banorte and Scotiabank Inverlat as lead managers; and Comerica Bank Mexico as participant.

“We are pleased that the refinancing of Copamex’s debt has been successfully concluded. This was a complex deal that involved a series of interdependent refinancing efforts and the sale of important company assets, and it required very close coordination of the various teams involved. The company’s management did an excellent job of coordinating all parts of this landmark transaction,” said Mario Espinosa, Citigroup´s managing director of global loans for Latin America.