-41-
was $115 million. PCC intended to finance this expansion with a $55
million loan from the Brazilian National Development Bank, a $30
million loan from IFC, and $30 million from internally generated
cash flow.
On November 19, 1986, PCC acquired 80 percent of Bates' stock,
one of its principal Brazilian competitors. The purchase price was
approximately $9 million. The Bates acquisition enabled PCC to
expand its capacity in the multiwall-paper-bag market.
2. Petitioner's Internal Analysis of a PCC Investment
At the request of NBM's International Department, Norwest
Corporate Finance27 evaluated IFC's 28.7-percent equity interest in
PCC at the beginning of 1987. The evaluation resulted in a February
1987 study (Corporate Finance study). At this time, NBM was
contemplating the acquisition of IFC's entire 28.7-percent interest.
Norwest Corporate Finance reviewed the forecast prepared by
PCC's management and found it reasonable, based on the available
information. It found that the projected level of sales and
profitability from the planned increase in capacity was reasonable
and concluded that PCC was not underperforming in comparison with
its Brazilian competitors.
The Corporate Finance study used both the market and income
approaches to value IFC's interest in PCC. The market approach
27 Norwest Corporate Finance was responsible for the
corporation's policies with regard to the deployment of its
assets and liabilities.
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