825.51/11–2745: Telegram

The Secretary of State to the Ambassador in Chile ( Bowers )

905. Eximbank has announced following to Press for release Nov 27.

Two loan agreements were signed today between Eximbank and Fomento Corp of Chile. First of these agreements provides for line of credit $28,000,000 to finance purchase of US equipment materials and services required for construction of an integrated iron and steel plant near Concepción, Chile by a new corp to be known as Compañía de Acero del Pacífico.

Fomento Corp has undertaken to raise from Chilean sources funds needed for all expenditures in Chile in connection with construction and operation of plant and for any expenditures in US in excess of $28,000,000 provided by Eximbank. It is estimated that Chilean investment in project will be approximately $25,000,000.

Experienced US technical assistance is to be used in design engineering construction and operation of plant which will produce pig iron, heavy structural, light structural, rails, galvanized sheets, wire pipe, and other iron and steel products.

Credit is fully guaranteed by Republic of Chile. It is to be available [Page 823] until Dec 31, 1948. Advances under credit are repayable in 40 semiannual installments first of which becomes due on June 15, 1949. They will bear interest at rate 4 percent per annum on unpaid principal balance.

The second loan agreement provides for line of credit of $5,000,000 to Fomento Corp. Of this amount $2,000,000 will be used to finance acquisition of such facilities as may be necessary to furnish electric power to new iron and steel plant. Repayment of advances under this line of credit is also guaranteed by Republic Chile,