Financing the Mozal Project

Assignment Questions

Should Alusaf$/$Gencor invest in the Mozal project?$*$

What are the greatest risks? Have they been adequately addressed?

Will the sponsors be able to finance the deal?

How does IFC involvement affect the deal? Will the IFC and the sponsors $($Alusaf and IDC$)$ share similar objectives? Should the IFC play an advisory role only or should it also invest in the Mozal project?

As an IFC board member, would you approve the recommended investment in Mozal?

What is the IFC's competitive advantage? To what extent does the IFC do something that is unique, valuable, and sustainable?

Note: In early June $1997,$ the yield on $10-$year U$.$S$.$ Treasury bonds was $6\mathrm{.}56\%,$ the yield on the $10-$year U$.$S$.$ Treasury inflation$-$indexed bonds was $3\mathrm{.}57\%,$ the yield on Nigerian Brady Bonds was $13\mathrm{.}35\%$ with a range between $13\mathrm{.}3\%-15\mathrm{.}0\%$ over the previous year $($Nigeria$\text{'}$s Institutional Investor country risk rating in $3/97$ was $14\mathrm{.}8)$; and the average asset beta for the three major U$.$S$.$ integrated aluminum producers $($Alcan Aluminum, Alcoa, and Reynolds Metals$)$ was $0\mathrm{.}78.$