mvvf presentation with enterprise bank - 3/16/11

3/16/2011 MVVF Presentation with Enterprise Bank

MassDevelopment: What we do• Promote capital investment in Massachusetts by providing

integrated financial and development solutions

• Business model – partner with banks, businesses, the state and municipalities to deliver programs

• Primary economic development tools and programs• Tax-exempt bonds• Loans and guarantees• Specialty Programs• Real estate planning and development services

MassDevelopment: Where we are• Boston• Brockton• Devens• Fall River• Lawrence• Pittsfield• Springfield• Westborough• Worcester

Tax-Exempt Bond Financing

• Interest is exempt from federal income tax• Interest rates 1 – 2% lower than conventional

loans• Borrower and project must both “qualify”

under IRS Code• Deal must be $1.2MM to $10MM in size• Bonds can be sold in capital markets or

purchased directly by a bank

Tax-Exempt Bond Financing

Eligible Projects• New equipment• Building acquisition and

expansion• Land acquisition• New construction• Debt refinancing• Projects in Recovery Zones

Eligible Borrowers• 501(c)(3) organizations• Assisted living/long-term

care developments• Manufacturers (small issues)• Environmental enterprises• Governmental entities• Affordable rental housing

developers• Hospitals and health care

institutions (effective 10/1/2010)

Real Estate Loans• Permanent Financing

– Multi-tenant, mixed use, commercial/industrial– Manufacturers, small businesses, non-profits

• Construction loans, usually as a participant with another lender

• Maximum loan $5Million (recently raised from $2Million!!)

• Up to 90% loan-to-value (LTV) on owner occupied real estate

Commercial Lending

• Real Estate : To $5,000,000

• Equipment: To $1,000,000

• Mortgage Insurance: up to $1,000,000 on either a tax-exempt bond or on a bank direct loan to a customer

New: Manufacturing Innovation Initiative

• Planning Loans– Up to $50,000 with low interest rates and terms up to 5 years– Consultant services to evaluate and improve demand,

fulfillment, market opportunities and other strategic opportunities

• Innovation Initiative Loans– Up to $500,000 with low rates and terms up to 7 years– Reconfiguration of operations, upgrades to plant and

equipment, product development, new staff and other uses.

New: Gateway Cities Loan Program

• Loans to finance real estate and equipment projects for businesses and non-profit organizations in Gateway Cities

• Reduced interest rates

• 24 small cities throughout Massachusetts are eligible

Real Estate DevelopmentMassDevelopment undertakes a wide range of realestate redevelopment projects that would not beundertaken by the private sector alone• Owner/developer

– Redevelopment of surplus publicly-owned properties – Military base reuse - Devens

• Real estate advisor to municipalities and non-profit organizations

• 43D for site development

Specialty Loan Programs

• Brownfields Redevelopment Fund

• Emerging Technology FundEmerging Technology Fund

• 100% Financing for Exporters

• Charter School Loan Guarantees

• USDA loan guarantees

• SBA 504 loans (as the bank, not as the CDC!)

Background

The Emerging Technology Fund (“The Fund”) was established in December of 2004 through an Enabling Act (Chapter 23G of the Massachusetts General Laws). The Fund was originally capitalized in the amount of $25 million and subsequently recapitalized (2006 and 2007) in the amounts of $15 million and $10 million respectively.

MassDevelopment, the Commonwealth’s economic development and financing Agency, administers the fund on behalf of the Commonwealth. An Advisory Committee selected by the Governor and the MassDevelopment Board of Directors, provides industry expertise and guidance.

Purpose

The Fund was established to encourage emerging technology companies to open their post R&D product production operations in the Commonwealth. It does this by making qualified investments in the form of secured loans to borrowers. MassDevelopment is responsible for originating, underwriting and monitoring loans provided by the Fund.

Funding Uses

Proceeds of the loan can be utilized to finance the expansion and build-out of leased facilities and for the acquisition of equipment defined as “Project Cost.” The program has been designed to leverage private financing for highly productive state-of-the-art facilities to foster the growth of high tech industry clusters and the skilled jobs they will bring in the 21st century.

Funding Criteria

• Must be considered an “emerging technology industry”;• Shall involve a transaction with the participation of at least two

at-risk private parties;• Loan amount not to exceed $2.5 million;• Loans approved by MassDevelopment Board of Directors.

Terms

• Seven year loan terms with interest-only payment options during the first year, converting to full amortization over the remaining loan term;

• Fixed-rate pricing at 1.50% over the WSJ prime rate with a current floor rate of 6.50%;

• One percent commitment fee;• First security interest in assets to be acquired (equipment

financing). Leasehold improvements to require ABA security interest and collateral assignment of lease;

• Warrants (To be determined).

Portfolio Companies

The following is a representative sample of companies financed through the Emerging Technology Fund:

• Beacon Power Corp.• Konarka Technologies, Inc.• Celldex Therapeutics (formerly Avant Immunotherapeutics)• BioVex, Inc.• Lilliputian Systems, Inc.• Valeritas, Inc.• Luminus Devices, Inc.• Qteros, Inc.

Green Loan Program

• To bridge the gap between costs of energy To bridge the gap between costs of energy efficient projects and rebates of subsidies efficient projects and rebates of subsidies provided by utilities and federally sponsored provided by utilities and federally sponsored programs; programs;

• $50,000 to $500,000, net of project related $50,000 to $500,000, net of project related rebates or subsidies;rebates or subsidies;

• Energy efficiency program must be Energy efficiency program must be authorized by Mass DPU or another State or authorized by Mass DPU or another State or Federal program.Federal program.

Green Loan Program uses:

• HVAC replacements or improvements;• Windows, insulation, other building

improvements;• Lighting;• Chillers and boilers;• Energy control systems;• Photovoltaic panels that meet the requirements

of a State or Federally sponsored program

For additional information

www.massdevelopment.com

800-445-8030

Contact

Ken Goode,Ken Goode, VP & Director of Business DevelopmentNortheastern Massachusetts regional office33 Andrews ParkwayDevens, MA 01434978-784-2976; or

Jim KenneyJim Kenney, VP & ETF Fund ManagerMassDevelopment160 Federal Street7th FloorBoston, MA 02110617-330-2000