We will be discussing three types of finance models: the standard finance model, foreign content models with eligible and ineligible content and the Local Cost finance models. As you can see, under the standard Exim financing scheme, there will be 85% financing; repayment will begin six months from the appropriate starting point, and, unless there is a lease involved, there will be level principal payments. The exposure fee can be financed as well, in this example, a 3% fee is assumed, creating a total finance portion of $875,000. Full payout is required and bullet (or delayed large principal payments) are not allowed.
Environmental exports are favored transactions at Eximbank. As you can see, in addition to the normal program features, there is automatic availability of local cost cover, capitalization of interest during the construction period, and the OECD maximum allowable country repayment term. Qualifying exports include those that aid in the abatement, mitigation, control or prevention of air, water, and ground contamination or pollution, or which provide protection in the handling of toxic substances. The following are examples of types of products considered eligible : instruments to measure or monitor water quality, emission or effluent pollution control equipment, waste disposal systems, services to upgrade environmental regulations, environmental or ecological engineering, training, or monitoring equipment, toxic material handling devices, water purification devices, energy efficiency enhancements. Projects considered eligible include: Air or water cleanup, ecology management, renewable or alternative energy such as photovoltaic, wind, hybrid, biomass, fuel cells, waste-to-energy, hydroelectric (<1GW), coal gasification, and geothermal; Environmental upgrades; Wastewater, sewage, toxic waste, waste treatment projects or cleanup.
When an application is received by Eximbank, it is logged in and routed to the Business Development division for review . For LI’s the LI is issued and the process is terminated. For final commitments and PC’s, the application is reviewed for completeness and routed to the loan division . Within the loan division the credit review is conducted, a simultaneous engineering review is conducted, and the application is presented to the appropriated reviewing body for final approval . Transactions under xxxx, with no policy implications can be approved by the Loan Committee; larger transactions must be approved by the Board. Transactions above $30mm and s/t transactions above $50mm must then be routed to the National Advisory Council for review. NAC members are EXIM, Treasury, State Dept, USTR, Dept of Commerce, AID, and the Federal Reserve Board; TDA advises on tied aid transactions. NAC has seven days to comment; in practice, the members are frequently polled the same day. Transactions above $100mm and all nuclear cases are routed to Congress (Speaker of the House and President of the Senate) for review. The maximum time period allowed in Congress varies between 25 and 35 days according to whether a recess is in process. Congress has never stopped an Exim transaction. After approval the transaction is routed to the Legal division for documentation and loan closing, and then routed to Credit Administration for disbursement
SSA is a priority region, as outlined by Ex-Im’s Charter
Establishment of SSA Advisory Committee
Africa Business Development Group
Africa Newsletter to for U.S. exporters and African buyers (available on-line at www.exim.gov/africa)
Short-Term Insurance Pilot Program (STIPP) makes insurance available to exports to 19 SSA countries that would otherwise be ineligible for Ex-Im support
$1 billion Nigerian Banking Facility (NBF) and $40 million Special Delegated Authority (SDA) with the African Export-Import Bank (Afreximbank)
Foreign Currency Guarantees
CFA Franc, S. African Rand
How Ex-Im Bank Can Assist You Short-Term Accounts Receivable Financing Medium-Term & Long-Term Financing Export Credit Insurance Your Needs Our Solutions Export Credit Insurance or Commercial Loan Guarantees; Project/Structured Finance; Transportation Pre-export financing Working Capital Guarantee
For medium- and long-term financing, Ex-Im Bank will support the following amounts:
85% of the contract price if eligible foreign content is 15% or less
Greater than 15% eligible foreign content, Ex-Im will support U.S. content only
Medium/Long-Term Foreign Content Policy 95% U.S. Content Eligible Foreign Content Ex-Im support available for 85% of contract price Ex-Im support available for 60% of contract price Company A Company B 5% 60% 40%
This is a Standard Medium/Long-Term Financing Model
Project or “limited recourse project financing” means debt repayment comes solely from project cash flow, i.e., future project revenues.
Even with Ex-Im Bank support, lenders need:
Strong off-take contracts
Technical comfort that project will be fully funded, constructed on time, and operated efficiently
Reliable / creditworthy parties: sponsors, constructors, operator, and output purchasers
Appropriate risk-sharing among project parties
Project Finance Structure Input Contracts Guaranteed supply of inputs to project SPV Made up of project sponsors that provide equity. SPV is the borrower. Off Taker Provides revenue stream to project. Must be creditworthy. EPC Likely source of U.S. content. Must show technical experience. O&M Contract with capable firm extends beyond repayment term. Host Government Legal /regulatory framework & evident support
Differences between Structured & Project Finance
Existing company borrower financing an expansion
Full recourse to borrower
Analyze historical and projected future cash
Limited “perfection of security”
Can finance 85% of project cost (subject to U.S. content)
SPV borrower financing green-field project or expansion
Limited recourse to parent companies
Analyze project’s future cash flows
Complex documentation to perfect security
More than 15% equity required, so total debt provided less than 85%
Ex-Im authorized a Multi-Buyer Working Capital Loan Guarantee for Kazar International of San Francisco for $877,500. This authorization allows Kazar International to facilitate its machinery and equipment export operations to many countries, including Senegal and Mauritania .
Jacaranda Plant and Machinery Hire Company of Zambia imported an STX 480 horsepower tractor supplied by CNH America LLC of Racine, Wisconsin. Ex-Im Bank guaranteed the $285,332 transaction through its Medium-Term Loan Guarantee product.
WELDY-LAMOT ASSOCIATES INC. WINS $350 MILLION RURAL ELECTRIFICATION TURNKEY CONTRACT FROM THE GOVERNMENT OF GHANA
$350 million rural electrification turnkey contract from the government of Ghana, and will procure equipment and services from U.S. suppliers around the country to fill the order backed by a $344 million loan from Ex-Im Bank.
An estimated 45 percent of the contract price will go to small businesses.
The government of Ghana sees the ongoing program to bring electrical connectivity to the populace of Ghana as the underpinning for the country's economic growth and poverty reduction. The goal is to connect all eligible communities with a minimum population of 500 individuals, or approximately 3,800 villages, to the national grid by 2020.
Ex-Im Bank provided a $135 million comprehensive guarantee allowing Nigeria LNG Ltd to purchase US-made equipment needed as part of a $1.9 billion expansion of its liquid natural gas production.
The transaction is a blend of project finance risk and corporate credit risk offered on a repayment term of 8.5 years
The expansion of Nigeria LNG's production capacity will produce economic and environmental benefits to Nigeria, as well as, US jobs.
This expansion will help Nigeria meet its stated objective to reduce the open burning (gas flaring) of natural gas.
Kellogg Brown and Root, a Houston, Texas international engineering and construction company is the US exporter for this transaction. Citibank N.A., London is the guaranteed lender.
Four export credit agencies (ECA) and one development bank are participating in financing Nigeria LNG's production expansion project called NLNGPlus. The ECA lenders (Ex-Im Bank, SACE, NCM and ECGD) and the Africa Development Bank are providing $720 million of the $1.1 billion in financing raised for this project.
14 Nigerian Banks in $1 billion Nigerian Banking Facility www.zenithbank.com Zenith Bank www.unionbankng.com Union Bank www.skyebanking.com Skye Bank www.oceanicbanknigeria.com Oceanic Bank www.intercontinentalbankplc.com Intercontinental Bank www.ibtc.com Investment Banking & Trust Company (IBTC) www.gtbplc.com Guaranty Trust Bank (GTB) www.firstcitygroup.com First City Monument www.firstbanknigeria.com First Bank www.fidelitybankplc.com Fidelity Bank www.ecobank.com Ecobank www.diamondbank.com Diamond Bank www.afribank.com Afribank www.accessbankplc.com Access Bank
SSA Country Exposure, leading countries Aircraft $112 South Africa Oil and Gas; Aircraft $412 Nigeria Aircraft $431 Kenya Oil and Gas; Electricity Transmission $563 Ghana Aircraft $231 Ethiopia Rescheduled Loans $192 Democratic Republic of Congo Rescheduled Loans $152 Côte d’Ivoire Aircraft $295 Angola Leading Export Amount ($M) Country