Washington DC -- Turkish tyre maker Petlas Lastik Sanayi ve Ticaret AS has obtained a $30 million loan from the International Finance Corp. (IFC) to support its expansion ambitions. This is in contrast to a recent statement from the company that it has won $250 million in funding.
Petlas had originally planned to use the financing toward expansion projects worth up to $250 million, to build a dedicated truck tyre factory and convert much of its 32-year-old plant in Kirsehir to radial car tyres.
According to documents available on the IFC Web site, Petlas originally budgeted $188 million to build a radial truck and bus tyre plant in central Anatolia province, with a capacity of up to 500,000 units a year.
The same documents show Petlas projects spending $32 million to modernise and expand the Kirsehir plant's radial capacity to 1.8 million units annually from 100,000.
Together the projects would create up to 690 new jobs. IFC documents show that up to $188 million in loans had been proposed for these projects.
â€œIFC's financing will enable us to upgrade production technology, expand our product range and produce eco-friendly tyres,â€ said Mustafa Ozcan, chairman of Abdulkadir Ozcan Otomotiv A.S. (AKO), Petlas' parent company, in a statement provided by the IFC. â€œWe are the largest employer in Kirsehir, and with IFC's support, we hope to create more jobs in the area.â€
A spokesman for the IFC confirmed that it had discussed these projects, but added, "However, the client revised the project costs, hence the amount approved for this project was US$80m (US$40m A loan and US$40m B loan). Subsequently the Company downsized the project, so the amount committed to date is US$30m A loan, in line with the current needs of the company. However, we are still considering an Equity participation in AKO."
The IFC, a unit of the World Bank, said its strategy for Turkey is to provide long-term support to growing and competitive second-tier clients and to export-oriented sectors like automotive, while meeting European Union requirements on environmental and quality standards. Terms of the loan were not disclosed.
Petlas is the fourth largest tyre maker in Turkey and No. 54 worldwide with sales of about $130 million. It was established by the Turkish government in 1976 and privatized in 1997. It employs about 1,100 making tyres for cars, trucks, tractors, heavy duty vehicles and aircraft.
Family-owned AKO is a leading tyre distributor and retreader, operating 13 branches across Turkey selling tyres, wheels, chain, batteries and other automotive components. It also operates a Bandag retread plant.
From Tire Business (A Crain publication)
Project proposal on IFC website
Press release (23 July) from IFC