The Export-Import Bank of the United States EXPORT-IMPORT BANK of the UNITED STATES Jobs Through Exports Craig S. O Connor, Director Office of Renewable Energy & Environmental Exports Presentation to Renewable Energy India 2008
Introduction Independent agency of the U.S. government established in 1934 to finance the export sales of U.S.-made goods and services has supported over $450 billion in exports. Main products include Direct Loans, Loan Guarantees, Export Credit Insurance, and Working Capital Guarantees No minimum nor maximum project size. Support for renewable energy and environmental exports mandated in Ex-Im Bank s Congressional Charter. Environmental Exports Program offers enhancements: 15-year loan terms for renewable energy + water treatment projects Major benefit for India! High Rating = Low Ex-Im Bank Guarantee Fee = 0.62% per year for 15-year loan Capitalization of interest during construction. Up to 30% local cost support within the U.S. scope of supply.
Environmental Exports Program Ex-Im Bank supported over 65 renewable energy projects totaling $1.27 billion in U.S. renewable energy goods and services exports since establishing the Environmental Exports Program in 1994. In just the past 3 years Ex-Im Bank has provided Working Capital Guarantees to Powerlight Corp., Uni-Solar, Evergreen Solar, GT Solar, and Geothermal Development Associates Export value of $315 million in renewable energy exports. Over the past 4 years, Ex-Im Bank has supported the export value of $326 million in water and wastewater treatment exports. Ex-Im Bank is usually the most cost-effective source of financing for the purchase of U.S technology and services. Ex-Im Bank financing can also support stand-alone services, and licenses. The Office of Renewable Energy & Environmental Exports created in late 2007 seeks to grow the Bank s environmental portfolio We welcome your projects!
Indian Infrastructure Facility Ex-Im Bank provides $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 (IREDA) Punjab National Bank. These institutions provide their guarantees to expedite processing of Ex-Im Bank-backed medium- and long-term financing for Indian buyers of U.S. exports. Each financial institution has an underlying pre-approved credit line of $50 to $250 million; Power Finance Co., has a pre-approved line of $800 million
Loan & Guarantee Program Guaranteed Loans made by commercial banks to a Indian buyer with a 100% unconditional repayment guarantee from Ex-Im Bank Guarantee covers 85% of the U.S. content of the transaction Banks often finance the 15% required cash payment An additional 30% local cost support within the U.S. scope of supply may be provided for environmental projects. Negotiated interest rates, can be a floating rate interest based on spread over 6-month U.S. dollar LIBOR rate, or fixed interest rates Guarantee available in major foreign currencies
Loan Guarantee Process The Guaranteed Lender bank submits the application for Final Commitment under its Master Guarantee Agreement along with the required information to establish the credit limit for the Indian customer or project. For transactions done under the Indian Infrastructure Facility the U.S.-based lending bank is designated by the Indian financial institution The information requirements from the foreign company for Medium- and Long- Term Loan Guarantees are as follows: A current credit report. A current commercial bank reference. Latest 3 years financial statements; interim statements if the latest year s financial statement is older than 1 year. Note: audited statements required for credits over $1MM Copy of the export contract. Ex-Im Bank s Loan Officer analyzes the application and makes a decision on the amount of credit to be supported.
Tani Bavi Power Company SREI International Finance Ltd., of Kolkata received a 6-year loan of U.S.$5,111,4242 to purchase of one GE gas turbine engine. SREI in turn structured a 6-year lease of the engine to Tani Bavi Power Company Ltd., of Bangalore. The gas turbine used as a standby unit in a $195 million 220MW power plant. UPS Capital of Hartford, Connecticut made the loan under Ex-Im Bank s Medium-Term Guarantee Program. The interest rate to SREI set at US$ LIBOR + a small spread U.S.$ LIBOR currently at 3.10% Ex-Im Bank s Exposure Fee- a one-time flat charge-at 3.66% financed under the 6-year credit (0.61% on a per year basis). The all-in-cost to SREI likely ranged from 5%-7% per year.
Structured Financing: Korea Solar Ex-Im Bank s Loan Guarantee to City National Bank supported its 15-year, $7.8MM financing of the 1MW solar power project in Gwangju, Korea. Powerlight (Sunpower), Berkely, CA, designed, developed, and deployed the solar power plant, located at the Kim Dae Jung Convention Center. Ex-Im Bank used the structured finance approach to create a reasonable assurance of repayment and support the project. No outside financial advisors, limited legal fees Structure of the deal included: 15-year guaranteed tariff rate for power sales Corporate guarantees of two relatively small private-sector companies as project sponsors Mortgage on the solar panels Debt service reserve account Financial covenants
Case Study: Geothermal Services Export Ex-Im Bank approved a $4.86 million 15-year Loan Guarantee to finance the export of environmental services to a geothermal power plant in Turkey. POWER Engineers, Inc., an engineering consulting firm based in Hailey, Idaho, is exporting procurement, design and engineering services. The services were provided for a 45-megawatt geothermal power plant project in western Turkey. Toronto-Dominion Bank made the loan under Ex-Im Bank s Guarantee. This deal qualified for Ex-Im Bank's 15-year financing terms under the Bank's special initiative to support exports of renewable energy and water projects. Illustrates Ex-Im Bank s ability to support stand-alone services.
Southwest Windpower, Inc Southwest Windpower, Inc., is using Ex-Im Bank s Short-Term Insurance to offer up to 360-day open account credit terms to customers in India as well as customers in many other countries. Serves as a compliment to local bank financing, replaces payment by L/Cs, enables Indian distributors to offer credit to their customers. Ex-Im Bank s Insurance Fee = 1.06%% for 120-day credit; 2.08% for 360-days Southwest Windpower submits an application along with the required information to establish a credit limit for the Indian customer to Ex-Im Bank. The information requirements from the Indian customer: $0-$100,000 credit reference from the Indian customer s bank or supplier http://www.exim.gov/pub/ins/pdf/eib99-14.pdf $100,000 - $300,000 a current credit report (CRISIL, etc.) + bank/trade reference $300,000 - $1,000,000 financial statement+ credit a current credit report plus a favorable bank or trade reference. $1,000,000+ latest 3-years audited statements, credit report, references, etc.
AMR Water Project Andhra Pradesh Ex-Im Bank s Working Capital Guarantee enabled the Robbins Company, Solon, Ohio USA, to manufacture equipment necessary for the AMR Water Project in Andhra Pradesh. Ex-Im Bank s Working Capital Guarantee to Wells Fargo Bank provided the funding for standby letters of credit required by the Government of India to secure advance payments by the customer. The $131 million contract is for 2 large tunnel-boring machines produced by Robbins to build a 27-mile long tunnel that supplies potable water to 300,000 acres and 516 villages in Andhra Pradesh. The tunnel carries water from the Srisailam Reservoir located in a wildlife sanctuary. The tunnel is built 300 feet below the NagarjunasagarTiger Preserve to avoid building a pipeline through the tiger s habitat. For this project Robbins won Ex-Im Bank s 2007 Small Business Environmental Exporter of the Year Award.
Conclusion Ex-Im Bank: top priority to support renewable energy and environmental exports Ex-Im Bank provides short, medium, and long-term financing to creditworthy international customers and projects, and working capital guarantees to U.S. exporters. Ex-Im Bank financing usually the most attractive source for financing U.S. environmental goods and services. 15-year loan terms for renewable energy and water treatment 30% local cost support within the U.S. Scope of supply Capitalization of interest during construction The Office of Renewable Energy & Environmental Exports created in late 2007 seeks to grow the Bank s environmental portfolio We welcome your projects! Internet http://www.exim.gov e-mail craig.oconnor@exim.gov Phone: 202-565-3556