Operations for US$62 million to be considered by CAF Board

(Caracas, June 7, 1995).-- Operations for a total of US$62 million will be submitted for the consideration of the 85th meeting of the CAF Board to be held on June 9 in its Caracas headquarters, during activities organized to commemorate 25 years of activities.

The event, to be chaired by Fernando Cossio, Bolivian Minister of Finance, will be attended by ministers and vice ministers representing the "A" and "B" series shareholders of CAF, institution formed by Bolivia, Colombia, Ecuador, Peru and Venezuela, with the presence of CAF President & CEO Enrique García.

This meeting is especially important because it will analyze three operations in favor of member countries -- Bolivia, Colombia and Venezuela -- and two multinational, in line with the CAF objectives of developing an adequate physical infrastructure, increasing the level of competitiveness of economies, and backing the Latin American integration process.

The operations are detailed below:

BOLIVIA: US$30 million for energy sector Line of Credit for Yacimientos Petrolíferos Fiscales Bolivianos (YPFB): To finance acquisition of equipment, machinery, contracting of specialized services, freight and working capital, the CAF Board will consider approval of a revolving (reusable) line of credit for US$30 million in favor of Yacimientos Petrolíferos Fiscales Bolivianos (YPFB) with a five year term.

The company, dedicated to exploration, production, industrialization and marketing of hydrocarbons in Bolivia, has, in addition to the domestic market, YPF SA in Argentina as client to which its exports natural gas. With the strategic backing of the Bolivian state, YPFB is characterized by high managerial and technical levels on the local market, its excellent operating results and high potential for export sales. The company recently signed a 20-year gas sale agreement in Brazil to supply the Brazilian market with between 8 and 16 million m³ a day of natural gas.

YPFB is one of the oldest and best quality CAF clients with an excellent credit record. The two partners are currently negotiating future projects, including gas pipelines to Brazil and Chile. To date, the Corporation has provided financial assistance to the company for execution of major projects such as development of the Víbora-Sinari fields and expansion of the Vuelta Grande-San Roque gas plant.

COLOMBIA: US$10 million to develop private sector Increase in lines of credit for Corporación Financiera Colombiana SA: To contribute to the economic development of Colombia by financing projects of private companies in the agriculture, mining, industrial, transport and tourism sectors, the CAF Board will consider increasing the existing credit facilities with Corporación Financiera Colombiana SA (Corficolombiana) from US$30 to US$40 million.

Formed in 1959 by private companies with the support of the World Bank, Corficolombiana operates in all the country through its 22 branches located in the main cities. The institution promotes creation and expansion of companies and industrial parks by providing specialized financial services. It is the third private financial corporation in Colombia and in its 36 years of activities has participated in the promotion and development of major industries projects.

By granting lines of credit such as this one, in recent years CAF has financed various projects by private Colombian companies to develop the productive sector of the country.

VENEZUELA: US$15 million for private enterprise Increase in line of credit for Corimón SACA: The Board will analyze increasing an existing line of credit from US$25 to US$40 million in favor of the private company Corimón, SACA to be used for acquisition of equipment, machinery and spare parts, permanent and temporary working capital, export of goods and services from the Andean region and contracting of services.

Corimón is a Venezuelan multinational company, whose main business is manufacture and distribution of paint and related products. In March 1993, Corimón was the first Venezuelan company to be listed on the New York Stock Exchange as American Depositary Shares (ADSs).

MULTINATIONAL: US$7 million in multi-sector investment Profund International Investment Fund: With a US$2 million contribution, the Board will consider equity participation in the formation of the Profund International SA investment fund, whose objective is to back the growth of Latin American financial institutions which provide services to small- and microenterprises in the region, final beneficiaries of the funds.

Profund is important because its capitalizing action will ease the shortage of commercial finance companies which provide services to the small and microenterprises sector. Its investments will prepare the institutions involved to become local interbank lenders and improve their access to discount lines from the central bank.

The first equity participations programmed by Profund will be in Banco Solidario of Bolivia (Bancosol), the world’s leading private commercial bank dedicated exclusively to microenterprise, and in Finansol of Colombia.

Fondo Empresarial para América Latina: Another point on the agenda of the 85th CAF Board Meeting is approval of a US$5 million participation in Fondo Empresarial para América Latina which invests in Latin American companies which require capital or quasi-capital for their development.

The fund manager is Baring Latin America Capital Ltd, subsidiary of Barings plc of UK, recently acquired by ING of Holland, the largest financial group of that country and the world’s third largest group of diversified financial services, which has special coverage of the emerging markets of Latin America, Asia and Eastern Europe.

Additionally, CAF will be able to participate up to US$5 million under the coinvestment mechanism, which will permit it to make direct investments in the subregion, contributing to the development of companies and capital markets in the region. The fund’s management team will be headed by Pedro Pablo Kuczynski, well-known Peruvian executive and former Minister of Economy of his country.

Together with organizations such as the IFC of the World Bank Group, Chemical Venture Partners of Chemical Bank, Bank of America, Mayo Foundation, Bank of Boston and Connecticut Mutual, CAF is the only Latin American financial institution to participate in the Fondo Empresarial, in line with its objective of facilitating the development of the private sectors of the region and supporting regional integration efforts.