Transcript Slide 1
Special Financing Options for Environmental Exports
India Trade Conference - July 29, 2010
Rob Guthrie Business Development Specialist Office of Renewable Energy & Evironmental Exports
Export-Import Bank of the U.S.
Independent, self-funding agency of the U.S. government since 1934; profitable!
MISSION: U.S. JOBS THROUGH EXPORTS 86% of all companies supported are small businesses Provides:
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Working Capital Guarantees
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Export Credit Insurance
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Loan Guarantees
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Direct Loans
Eligibility Criteria
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U.S. Content Short-term transactions: 51% minimum Medium/long-term transactions: only U.S. content, up to 85%
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No Defense Articles Exceptions may be made for humanitarian purposes, drug interdiction, & dual-use items
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Country Eligibility Support available in over 155 countries Restrictions may apply for political or economic reasons Refer to the Country Limitation Schedule (CLS) at www.exim.gov
Environmental Exports Program
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Created in 1994
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In FY 2009, supported $640 million exports of environmentally beneficial goods and services
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Created the Office of Renewable Energy & Environmental Exports in 2008
Environmental Exports Program
Enhancements:
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Terms of up to 18 years for renewable energy and water treatment projects
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Up to 30% local cost support within the U.S. scope of supply
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Capitalization of interest during construction
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Grace periods of up to 18 months
Ex-Im Bank and India
Ex-Im Bank's current financing to India totals $5.9 billion. Of this $5.9 billion, $2.2 billion in loan guarantees for Indian transactions were booked in 2009 alone. India is now Ex Im Bank’s second largest ‘customer,’ after Mexico ($7.8 billion).
Ex-Im Bank has a number of Indian renewable energy projects in its pipeline of credit applications.
Working Capital Guarantee
Ex-Im Bank provides 90% repayment guarantee for working capital loans, revolving or transaction-based, made by commercial lenders to U.S. companies to finance foreign purchase orders.
Enables exporters to finance export-bound materials, labor, and overhead to produce goods/services for export: 100% collateral.
May be used to cover stand-by letters of credit for bid and performance bonds: 10% collateral.
Expand Your Borrowing Base!
Example: United Solar Ovonic
In Feb. 2008, Ex-Im Bank guaranteed a $25 million revolving working capital credit line for United Solar Ovonic of Auburn Hills, MI (uni-solar.com).
The credit was guaranteed under Ex Im Bank’s ‘delegated authority' Working Capital Guarantee Program that helps small and medium-sized businesses obtain larger working capital loans in less time.
Example: United Solar Ovonic
Export Credit Insurance
Enables U.S. exporters to offer short- and medium-term credit directly to their customers. Credit insurance is an attractive substitute to cash-in-advance, letters of credit, and local bank financing.
Using Ex-Im Bank to insure a letter of credit instead of paying bank confirmation charges is usually more cost effective.
Example: Suniva
Suniva, Inc. of Norcross, GA manufactures high efficiency solar cells and modules, and exports worldwide (suniva.com).
Ex Im Bank’s Short-Term Credit Insurance enables Suniva to offer open account credit terms to its distributors.
Replaces bank financing (letter of credit), enabling its distributors to offer credit to their customers.
Example: Suniva
Credit Insurance: Cost to Suniva:
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60 days - 0.55%
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90 days - 0.90%
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180 days - 1.15%
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360 days - 1.77%
Example: Suniva
Financing Alternatives:
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Cash in advance: may be too expensive
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Foreign letters of credit carry interest rates of 10 – 25% per annum: much less affordable Private sector insurance: it’s available, but it’s typically much more expensive; does not cater to small businesses
Suniva: Karnataka, India Project
Buyer Loan Guarantee Program
Guaranteed Loans: made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% unconditional repayment guarantee from Ex-Im Bank.
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Coverage: 85% of the U.S. content Negotiated interest rates, usually a floating rate based on spread over 6-month U.S. dollar LIBOR rate: 0.69%
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15% required cash payment: banks may finance Guarantee available in major foreign currencies
Example: GT Solar
GT Solar, Inc. of Merrimack NH manufactures solar module production lines (gtsolar.com).
Ex Im Bank’s provided a 100% medium-term loan guarantee to London Forfaiting to support a $2.25 million loan.
Maharishi Solar Technology Pvt. Ltd. of New Delhi was the buyer.
Example: Bio-Microbics, Inc.
Bio-Microbics Inc., of Shawnee Mission, KS, a small business, exported 10 of its FAST wastewater treatment systems and related equipment to Mexico (biomicrobics.com).
The company benefits from a 10-year, $824,000 Ex-Im Bank 100% loan guarantee.
The transaction received longer than normal repayment terms under Ex-Im Bank's Environmental Exports Program.
Direct Loan Program
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Direct Loans are made by Ex-Im Bank to a foreign buyer.
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Current interest rate for a 10 18 year loan: ≤ 4.40%
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Ex-Im Bank requires the buyer to make a cash payment to the exporter equal to at least 15% of the U.S. supply contract.
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15% cash payment may be borrowed from a lender, or be from the buyer’s own funds.
Example: Clipper Windpower
Ex-Im Bank made a $81 million direct loan in November, 2009 to finance the export of 27 2.5-mw Clipper Windpower turbines to Mexico (clipperwind.com).
The project owner is using Clipper's Liberty turbines to power a 67.5-megawatt wind farm at La Ventosa-La Mata in Oaxaca, Mexico.
Example: Clipper Windpower
A 15-year power purchase agreement was signed with Wal-Mart de Mexico, the nations’s largest employer.
The power purchase price is CHEAPER than what Wal-Mart pays for power from the national grid!
Example: Clipper Windpower
Conclusion
Ex-Im Bank: renewable energy & environmental exports are TOP PRIORITY. Ex-Im Bank is interested in projects of ANY SIZE. Ex-Im Bank supports short, medium, and long-term financing to creditworthy international customers, and U.S. borrowers of working capital.
We will work with you to create ‘bankable’ projects
Contacts
Rob Guthrie - Newport Beach, CA
Craig O’Connor - Washington, DC
Alexandra McCann - Washington, DC
WWW.EXIM.GOV