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:

Working Capital Guarantees

Export Credit Insurance

Loan Guarantees

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%

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

Created in 1994

In FY 2009, supported $640 million exports of environmentally beneficial goods and services

Created the Office of Renewable Energy & Environmental Exports in 2008

Environmental Exports Program

Enhancements:

Terms of up to 18 years for renewable energy and water treatment projects

Up to 30% local cost support within the U.S. scope of supply

Capitalization of interest during construction

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:

60 days - 0.55%

90 days - 0.90%

180 days - 1.15%

360 days - 1.77%

Example: Suniva

Financing Alternatives:

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Cash in advance: may be too expensive

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

Direct Loans are made by Ex-Im Bank to a foreign buyer.

Current interest rate for a 10 18 year loan: ≤ 4.40%

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.

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

[email protected]

Craig O’Connor - Washington, DC

[email protected]

Alexandra McCann - Washington, DC

[email protected]

WWW.EXIM.GOV