-39-
Memorandum23 regarding a Brazilian company, Papel e Celulose
Catarinense, S.A. (PCC), prepared by Banco Bozano, Simonsen de
Investimento, S.A. (Banco Bozano) and Morgan Grenfell & Co., Ltd.24
The International Finance Corporation (IFC),25 a World Bank
affiliate, engaged these firms to market its 28.7-percent interest
in PCC.26 IFC's asking price for its 28.7-percent interest in PCC
was $25 million.
PCC, headquartered in San Paulo, was a subsidiary of Industrias
Klabin Papel e Celulose, S.A. (IKPC), a Brazilian corporation
incorporated in 1934. IKPC was the largest pulp and paper producer
in South America and among the 100 largest in the world. Prior to
the transaction at issue herein, PCC's stock was owned as follows:
IKPC--70.9 percent; IFC--28.7 percent; and PCC's Administration
23 The Information Memorandum did not by its terms limit
the offering to prospective purchasers who intended to engage in
a debt-equity conversion.
24 At the time petitioner was considering an investment in
PCC, it was also reviewing a possible investment in Medtronic do
Brazil, as well as the purchase of Mellon Bank's 12.5-percent
interest in Banco Bozano.
25 IFC aids in the development of private sector projects
in developing countries, such as providing "seed capital" to
private ventures and projects. IFC focuses its assistance on
those projects which, while economically and financially
attractive, cannot by themselves attract enough managerial,
technical, or financial resources to be implemented. Once these
projects reach success and maturity, IFC expects to divest and
redeploy its assets to assist the development of new attractive
ventures.
26 PCC was IFC's oldest equity investment, dating back to
the late 1960's. By 1986, IFC had decided that PCC's operational
and financial maturity warranted the sale of its interest.
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