UPDATE 1-IADB creates $150 mln fund for sugar, biofuel firms

(Adds details from statement)

WASHINGTON, Jan 16 (Reuters) - The Inter-American Development Bank on Friday said it will create a $150 million fund to support trade financing and investment loans to sugar and bioenergy firms, and exporters in Brazil, Mexico and Central America affected by the global credit crunch.

The Latin American regional lender said it may expand the fund to $250 million, depending on market conditions.

"The facility will offer different types of loans, although it will place an emphasis on short-term pre-export and inventory financing for sugar and biofuels producers and exporters at a time when lending for the agricultural sector is drying up due to the global financial crisis," the IADB said.

The program will also provide medium-term loans for replanting sugarcane fields, building drip irrigation systems, upgrading sugar mills and ethanol distilleries, and making them more energy efficient.

LACFIN Holdings, a company owned by New York-based investment firm Reservoir Capital Group, will invest $75 million in the program, which will be managed by New Jersey-based Latin American Capital Management (LACAM).

The IADB said it will try to identify new clients in Guatemala, Nicaragua, Dominican Republic, El Salvador and northeastern Brazil where one in three workers is employed in the sugar industry. (Reporting by Lesley Wroughton; Editing by James Dalgleish)