Ex-Im Bank: Exporting to ANESA Jan Blaho, Business Development Officer, Midwest

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1 Ex-Im Bank: Exporting to ANESA Jan Blaho, Business Development Officer, Midwest May 12, 2010

2 Who are we and what do we do? Mission: Support US exports in order to create and sustain US jobs Ex-Im Bank is an independent agency of the United States government Established in 1934 Headquartered in Washington, DC 5 regional business development offices, plus 4 satellite locations (Dallas, San Diego, San Francisco and Washington D.C.)

3 Foreign Export Credit Agencies compete with Ex-Im Bank We have foreign competitors that have similar support EDC ECGD Coface EulerHermes JBIC Sace KEIC, Keximbank OeKB Efic Canada UK France Germany Japan Italy S. Korea Austria Australia

4 The National Export Initiative is a White House priority. Third, we need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security. We have to seek new markets aggressively, just as our competitors are. President Barack Obama State of the Union Address January 27, 2010

5 Exports are a small component of US GDP Export Leaders, 2009 $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 Exports (millions USD) Exports/GDP (%) 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% China Germany United States Japan France Netherlands Italy South Korea United Kingdom Canada

6 Where does Minnesota export? In Thousands USD Source:

7 Ex-Im Bank supports Minnesota exporters! Export-Import Bank's 5-Year Impact (Fiscal Year 2006 thru 2010) Companies Supported Communities Supported - 49 Value of Exports Supported - $ million Export-Import Bank's FY 2009 & FY 2010 Impact Value of Exports Supported - $68.92 million (FY 2009) $ million (FY 2010)

8 Ex-Im Bank helps US companies Minimize risks Provide a Marketing Advantage Supplement commercial financing

9 Ex-Im Bank helps overseas buyers of US goods and services Improved Cash Flow Supplemental Liquidity Lower Interest Rates Loan Guarantees lessen the interest rate commercial lenders require Extended Terms Longer payback periods than typically available on the market Establish Credit Record Through carefully designed repayment structure supported by local banks and sovereign guarantees

10 Ex-Im Bank has 7 primary financing products Term Short-Term Financing Solutions Export Credit Insurance Working Capital Guarantees Export Credit Insurance Medium & Long-Term Financing Commercial Loan Guarantees Direct Loans Project/Structured Finance Transportation (Aircraft)

11 Ex-Im Bank support covers the spectrum Pre-Export Financing Post-Export Financing Working Capital Guarantees Insurance Guarantees Direct Loans

12 Pre-Export Financing for your US company: Working Capital Guarantee Program

13 A Working Capital Guarantee is for US companies This is a guarantee to a commercial lender which makes a loan to an exporter to purchase or manufacture US goods and services for export

14 A Working Capital Guarantee assists small and medium sized companies Assists small and mid-size companies in obtaining working capital to produce or purchase US goods and services for export Provides a 90% guarantee of repayment (principal and interest) on loans to exporters May be set up as Transaction-Specific or a Revolving Line of Credit No minimum or maximum amounts Loan supports advances made against export-related inventory (including WIP) and foreign receivables: Up to 75% advance rate on inventory, and up to 90% on foreign receivables

15 Working Capital Guarantees must be creditworthy Asset-Based: fully collateralized Personal guarantees are required of owner(s) Cost: $100 application fee Up to 1.5% facility fee Reduced fee if: Exports sales structured under L/Cs and/or secured by export credit insurance; exporter s financial ratios are within its industry median A lower fee may be negotiated with a Delegated Authority Lender (see list on Interest rate is determined by the lender

16 Working Capital Guarantee increases your borrowing power

17 The Robbins Company is a success story Challenge: Small business, manufacturer of hard-rock tunnel-boring machines, needed more financing than its bank could provided to fulfill the largest order in the company s history. Solution: Company received a $25 million loan facility backed by an Ex-Im Bank working capital guarantee to support stand-by L/Cs to secure the advance payments made by the Indian customer. Result: The firm was able to accept the $131 million contract, and added 50 new employees.

18 POST export financing for your overseas buyers

19 There must be three elements to an Ex-Im Bank transaction the three C s Cover Policy: We must be open in the buyer s country. Content: The U.S. Export must have significant U.S. content. Creditworthiness: The transaction must have a reasonable assurance of repayment.

20 Cover P0licy: Where is Ex-Im Bank Available? Short-term Sector(s) Open Medium-term Sector(s) Open Long-term Sector(s) Open Open for Specially Financed Transactions Yes Afganistan Algeria Public & Private Public & Private Public & Private Yes Egypt Public & Private Public & Private Public & Private Yes Ghana Public & Private Public & Private Public & Private Yes India Public & Private Public & Private Public & Private Yes Iraq Yes Israel Public & Private Public & Private Public & Private Yes Jordan Public & Private Public & Private Public & Private Yes Kenya Public & Private Public & Private Public & Private Yes Kuwait Public & Private Public & Private Public & Private Yes Lebanon Public & Private Public & Private Yes Lybia Public & Private Public & Private Public Yes Morocco Public & Private Public & Private Public & Private Yes Nigeria Public & Private Public & Private Public & Private Yes Pakistan Public & Private Public & Private Public & Private Yes Qatar Public & Private Public & Private Public & Private Yes Saudi Arabia Public & Private Public & Private Public & Private Yes Senegal Public & Private Public & Private Private Yes South Africa Public & Private Public & Private Public & Private Yes United Arab Emirates Public & Private Public & Private Public & Private Yes

21 Content: We have a made in the USA Content Policy Export must be exported from the United States 51% U.S. content for short-term transactions up to 85% U.S. content for medium/long-term transactions (OECD driven) Services must be performed by US-based personnel, either in the US or in the host country

22 Creditworthiness: Credit standards differ for public and private sector transactions Public Sector Transactions: Ex-Im Bank will most likely require a Ministry of Finance Guarantee Private Sector Transactions: For transactions over a million USD, Ex-Im Bank requires three years of audited financial statements Ex-Im Bank s credit standards are on our website: If credit standards cannot be met, Ex-Im Bank would need other credit enhancements such as a local bank guarantee.

23 Short-Term Export Credit Insurance

24 Short-Term Export Credit Insurance allows you to extend credit with little risk Buyer Commercial Contract Open Account Terms Repayment Exporter Other Short-Term Policies: Single-Buyer (exporter) Multi-Buyer (exporter) Bank Letter of Credit (bank) Financial Institution Buyer Credit (bank) Ex-Im Bank Insurance Application Ex-Im Bank Insurance Ex-Im Bank

25 Exposure fee advice tables explain the costs

26 The application for ST Insurance is three steps The following are the required steps to obtain an Export Credit Insurance policy: U.S. exporter and international buyer negotiate a sales contract; International buyer supplies the U.S. exporter with financial information, as required by Ex-Im Bank s credit standards. U.S. exporter submits insurance application to Ex-Im Bank, which includes requisite financial information received from the buyer.

27 Medium and Long- Term Loan Guarantees and Direct Loans

28 Ex-Im Bank has a Medium/Long-Term Foreign Content Policy 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

29 A Loan Guarantee involves several partners U.S. Supplier EX-IM Bank Goods & Services Payment Insurance/Loan Guarantee Application Ex-Im Bank Guarantee Loan Repayments Overseas Buyer Financial Documentation Bank: U.S./ International Guarantor Bank or Corp

30 Ex-Im Bank has established the India Infrastructure Facility with nine banks Ex-Im Bank provided $2.45 billion medium- and long-term cost-effective funding to nine Indian financial institutions: ICICI Bank Ltd. Power Finance Co. Infrastructure Development Finance Corporation Industrial Development Bank of India India Infrastructure Finance Company, Ltd. State Bank of India Infrastructure Leasing & Financial Services India Renewable Energy Development Agency Punjab National Bank.

31 Ex-Im Bank has also established a $1 billion Nigerian Banking Facility Access Bank Ecobank Stanbic Investment Banking & Trust Company (IBTC) Zenith Bank First City Monument Skye Bank Fidelity Bank First Bank Guaranty Trust Bank (GTB) Diamond Bank Afribank Intercontinental Bank Oceanic Bank Union Bank

32 Ex-Im Bank Exposure Fee Calculator assists with the fee structure See:

33 Applications for Medium-Term financing is also three steps There are three steps to approaching Ex-Im Bank: U.S. exporter and international buyer negotiate a sales contract; International buyer and/or U.S. exporter identify a financing institution to provide the loan (commonly a U.S. bank, but foreign banks willing to lend U.S. dollars can also apply); Lending institution submits final application to Ex-Im Bank for review and approval. Letter of Interest (Eligible Applicants: Anyone) To initiate financing discussions with lending institutions or to complement financing proposals for competitive bids, U.S exporters and importers can obtain an Ex-Im Bank Letter of Interest (LI) to assist in negotiations for medium- and long-term transactions. The LI indicates the Bank's willingness to consider a financing offer if sale is completed. An LI can be issued within seven days of a request for financing and remains in effect for six months.

34 Ex-Im Bank has several main policies Environmental transactions can received extended terms up to 18 years Shipping on US Flag carrier (Only for All Direct Loans and Guarantees over $20 million) Foreign content (eligible vs. ineligible) Used Equipment Questionnaire Local Costs -> Ex-Im Bank can support up to 30% of the US contract value in costs incurred in the buyer s country Military -> Ex-Im Bank cannot consider Military exports

35 Minnesota and Exporting equals success Siemens Power Transmission & Distribution, Inc., EMIS-Division, (SPTD EMIS), Minneapolis, MN Product: $35 million long-term loan guarantee Export: software and services Buyer: Israel Electric Corp. Ltd. (IEC) Guaranteed lender: BNP-Paribas, New York, NY. Minnesota Small Business Exporter: Dom-Ex Inc. in Hibbing, MN Product: used Caterpillar trucks and new construction equipment and spare parts Buyer: Concasseur Basalte du Ndiambour in Dakar, Senegal Product: $2.1 million medium-term guarantee from Ex-Im Bank