China Co-Financing Fund for Latin America and the Caribbean provides $32.2 million loan to Elcatex for multiple purposes

On June 22, 2020, Elcatex, S. de R.L. (“ELCATEX”), a leading textile industry company in Honduras and subsidiary of Grupo Elcatex, signed two loan agreements: a $32,210,000 loan agreement with the China Co-Financing Fund for Latin America and the Caribbean and a $64 million loan agreement with IDB Invest (Inter-American Investment Corporation). Both loans have 6-year maturities. The loan proceeds are to be used by the borrower for four purposes: (i) to support economic growth and export diversification; (ii) construction and fit out of a new textile plant (San Juan Textiles Project) located in San Juan Innovation Park, an Export Processing Zone (“EPZ”) in Choloma; (iii) purchase of sewing equipment; and (iv) to finance capital investment, working capital and liability restructuring to increase ELCATEX’s production capacity. This project also involves the implementation of a gender approach aimed at increasing the number of companies in the supply chain that are led or owned by women, with the goal of maintaining and increasing the formal participation of women in this industry. Using funds from the Women Entrepreneurs Finance Initiative (We-Fi) program, IDB Invest's advisory services team will work with Elcatex to identify opportunities to increase access to the value chain for women suppliers. The action plan includes training for senior management and the procurement team to disaggregate the training and suppliers monitoring system, as well as measures to enhance the process of incorporating new SME. This project is the first in Latin America and the Caribbean that is part of the We-Fi initiative, a partnership aimed at unlocking financing and market access for women-owned or women-led companies. We-Fi is an international program with 14 governments and six multilateral development banks as implementing partners, as well as other public and private sector actors from all over the world. This project is also part of IDB Invest's response to the crisis generated by COVID-19 in Latin America and the Caribbean. Since the start of the pandemic, Elcatex has demonstrated unprecedented flexibility by initially adjusting its biosecurity protocols to protect its associates and later adapting its production, design and apparel lines to produce personal protection equipment like facemasks and surgical gowns. According to IDB Invest, this project had entered implementation as of May 2022.

Additional details

1. The IDB project identification number is 12375-01. 2. IDB Invest, a member of the IDB Group, is a multilateral development bank committed to promoting the economic development of its member countries in Latin America and the Caribbean through the private sector. IDB Invest finances sustainable companies and projects to achieve financial results and maximize economic, social and environmental development in the region. With a portfolio of $12.1 billion in asset management and 333 clients in 24 countries, IDB Invest provides innovative financial solutions and advisory services that meet the needs of its clients in a variety of industries. 3. Grupo Elcatex was founded in 1960 by Juan Miguel Canahuati, a pioneer in the Honduran textile industry. The group has diversified its operations, and its business is sorted into four divisions: textiles and synthetic filament; energy; industrial parks; and technology and innovation. It produces 9,400 direct jobs, impacting more than 18,000 people. Elcatex is a market leader, with annual production of 85 million pounds of fabric. It operates five sewing plants that produce more than 120 million pieces of clothing per year (white T-shirts, sweatshirts, men's underwear, and sport clothing). The main export destination is the United States, thanks to Honduras’s competitive and comparative advantages (geographical location, workforce availability, regulatory framework with incentives, free trade agreements, etc.).

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