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Jobs Through Exports
EXPORT-IMPORT BANK of the UNITED STATES
EXPORT-IMPORT BANK of the UNITED STATES
Financing Environmental Exports
Green Trade Network SummitSanta Cruz, CA
September 19, 2008
Financing Environmental Exports
Green Trade Network SummitSanta Cruz, CA
September 19, 2008
Craig O’Connor, Director
Office of Renewable Energy &
Environmental Exports
U.S. Ex-Im BankU.S. Ex-Im BankU.S. Ex-Im BankU.S. Ex-Im Bank 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
Capitalization of interest during construction.
Up to 30% local cost support within the U.S. scope of supply.
Environmental Exports Environmental Exports ProgramProgramEnvironmental Exports Environmental Exports ProgramProgram Ex-Im Bank supported over $2 billion in U.S. environmental exports since establishing the Environmental Exports
Program in 1994.
Last 3 years alone Ex-Im Bank has provided Working Capital Guarantees to Powerlight, Uni-Solar, GT Solar, SierraTherm, etc. = Export value of $315 million
Over the past 4 years, Ex-Im Bank has supported the export value of $326 million in water and wastewater Over the past 4 years, Ex-Im Bank has supported the export value of $326 million in water and wastewater treatment exports. treatment exports.
Ex-Im Bank is usually the most cost-effective source of financing for the purchase of U.S technology and Ex-Im Bank is usually the most cost-effective source of financing for the purchase of U.S technology and services.services.
Ex-Im Bank often plays a critical early-stage role in helping small clean energy companies finance their operations.
With Ex-Im Bank’s early-stage intervention these companies can grow their international business, increase profitability, and ultimately attract significant equity investment.
Powerlight, GT Solar, Evergreen Solar, and Southwest Windpower are examples of companies that received early-stage financial support from Ex-Im Bank, and who went on to attract substantial equity investment.
Export Credit InsuranceExport Credit InsuranceExport Credit InsuranceExport Credit Insurance Enables U.S. exporters to offer short- and medium-term credit directly to their customers.
Export credit is an attractive substitute to cash-in-advance, letters of credit, and costly local bank financing.
Using Ex-Im Bank to insure a letter of credit instead of paying bank confirmation charges usually more cost effective.
Insures exports up to 180 days from date of importation of the goods; capital goods terms of 360 days-7+ years.
Multi-Buyer Insurance Policy covers short-term sales made by a exporter during a 12-month period - policy requires ALL export credit sales to be insured
Provides 95% commercial, 95% political coverage against buyer payment defaults, $0 loss deductible for small business
Special Buyer Credit Limits provided revolving lines for foreign buyers for a 1-year period.
Single-Buyer Insurance Policy covers short-term export credit sales made by a exporter to a single foreign buyer during a 12-month policy period.
Can support single or multiple shipments
Case Study: Case Study: Blue Sky Blue Sky Energy, Inc.Energy, Inc.Case Study: Case Study: Blue Sky Blue Sky Energy, Inc.Energy, Inc.
Blue Sky Energy, Inc., Vista, CA, uses Ex-Im Bank’s Short-Term Insurance to offer “open account” credit to customers in Spain, Portugal, South Africa, Japan, etc.
Blue Sky Energy makes solar energy charge controllers. Patented technology allows increase in power from PV energy systems
Blue Sky Energy’s use of Ex-Im Bank Insurance is supporting their growth in exports as overseas dealers offer credit to their customers.
Blue Sky Energy’s use of Ex-Im Bank Insurance provides risk mitigation on open account sales, and creates collateral for working capital borrowing.
Blue Sky Energy’s broker, Meridian Finance Group, active with Ex-Im Bank.
Financing is often THE critical factor in winning an export sale in emerging markets, open account has advantages. “Supplier credit” attractive substitute to buyer using L/Cs Interest rates very high in many international markets Increase order quantities to existing customers/distributors. Enter new “risky” markets, attract new customers/distributors. 80% of sales in Europe done on open account basis
Case Study: Energy Recovery, Inc.Case Study: Energy Recovery, Inc. Energy Recovery, Inc. (ERI), San Leandro, CA has used Ex-Im Bank's environmental insurance
since 2002, and has also used an Ex-Im Bank-guaranteed working capital line of credit.
ERI's patented PX system recovers energy from seawater desalination reverse osmosis systems at up to 97% efficiency.
ERI’s PX® technology has emerged as the industry standard solution for seawater desalination, specified by over 80 OEMs worldwide with over 6,130 PX® devices installed saving customers an estimated 580 MW of energy or $407 million a year in operating costs.
Ex-Im Bank’s Short-Term Insurance enables ERI to offer open account financing to international customers @ 1% cost for 120-day credit.
Ex-Im Bank’s Working Capital Guarantee helps ERI finance the build-out for export orders.
For ERI, exports to Australia, the Middle East, China, Europe and North Africa accounting for nearly 100% of the sales
Short-Term Credit ProcessShort-Term Credit ProcessShort-Term Credit ProcessShort-Term Credit Process The U.S. supplier submits the application along with the required information to
establish a credit limit for the foreign customer to Ex-Im Bank.
All applications can be done online!
The information requirements from the company for credit limits for the foreign
buyer are as follows:
$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 + bank/trade reference
can be ordered from a number of credit reporting agencies by the U.S. exporter (see www.exim.gov/pub/ins/pdf/eib99-08.pdf)
$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.
Loan & Guarantee ProgramLoan & Guarantee ProgramLoan & Guarantee ProgramLoan & 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
Guarantee covers 85% of the U.S. content of the transaction.
Negotiated interest rates, usually a floating rate based on a small spread over 6-month U.S. dollar LIBOR rate
Banks may also arranged fixed interest rates via PEFCO
Banks often finance the 15% required cash payment
Guarantee available in major foreign currencies
Ex-Im Bank charges a 1-time flat Exposure Fee based on the country of the borrower + term of the credit
Example:
Major benefit for Mexico!! High Rating = Low Ex-Im Bank Fee
0.32% per year for 15-year loan
Loan Guarantee ProcessLoan Guarantee ProcessLoan Guarantee ProcessLoan Guarantee Process
1. 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 foreign customer.
2. The information requirements from the foreign company for Medium-Term credit limits 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.
3. Ex-Im Bank’s Loan Officer analyzes the application and makes a decision on the amount of credit to be supported.
What Can Ex-Im do for “Small” What Can Ex-Im do for “Small” Projects?Projects?What Can Ex-Im do for “Small” What Can Ex-Im do for “Small” Projects?Projects?
Ex-Im Bank can make a credit decision about a potential project in one of three ways:
1) Based strictly on the balance sheet of the borrower or a guarantor;
2) As limited recourse project finance with a special purpose company borrower and project cash flows as the source of repayment;
3) Or, as a structured finance transaction with the borrower’s balance sheet enhanced by special features.
Many projects are too large to be feasible strictly on a balance sheet… but too small to merit the time and expense associated with project finance transactions.
“Structured” finance may be an alternative.
StructuredStructured Financing: Financing: Korea SolarKorea SolarStructuredStructured Financing: Financing: Korea SolarKorea Solar
Ex-Im Bank’s Loan Guarantee to City National Bank supported its 15-year, $7.8MM financing of the 1MW solar power 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.project in Gwangju, Korea.
Powerlight (Sunpower), Berkely, CA, designed, developed, and deployed the solar power plant, located at the Kim Dae Powerlight (Sunpower), Berkely, CA, designed, developed, and deployed the solar power plant, located at the Kim Dae Jung Convention Center. Jung Convention Center.
Ex-Im Bank used the “structured finance” approach to create a reasonable assurance of repayment and support the Ex-Im Bank used the “structured finance” approach to create a reasonable assurance of repayment and support the project.project.
No outside financial advisors, limited legal feesNo outside financial advisors, limited legal fees
Structure of the deal included:Structure of the deal included:
15-year guaranteed tariff rate for power sales15-year guaranteed tariff rate for power sales
Corporate guarantees of two relatively small private-sector companies as project sponsors Corporate guarantees of two relatively small private-sector companies as project sponsors
Mortgage on the solar panelsMortgage on the solar panels
Debt service reserve accountDebt service reserve account
Financial covenantsFinancial covenants
Working Capital GuaranteeWorking Capital GuaranteeWorking Capital GuaranteeWorking Capital Guarantee Ex-Im Bank provides a 90% repayment Guarantee for working capital loans, revolving or transaction
based, made by commercial lenders to small businesses to finance export sales.
The Working Capital Guarantee serves as the collateral to the commercial lender by mitigating the risk inherent when the source of repayment for the loan is an overseas contract.
Enables exporters to finance materials, labor, and overhead to produce goods/services for export.
Enables exporters to cover standby letters of credit for bid and performance bonds, warranty bonds, and payment guarantees.
Enables the exporters to finance foreign sales receivables.
Most Working Capital Guarantees provided by Delegated Authority Lenders (see www.exim.gov for a list) without prior Ex-Im Bank approval.
Energy Recovery, Powerlight, MCWong Environmental, Aquatec Water are just a few CA companies that have financed export sales under this program.
Case Study: SierraThermCase Study: SierraTherm
SierraTherm of Watsonville, CA received a working capital loan made possible through Ex-Im Bank’s Working Capital Guarantee Program (“WCGP”).
SierraTherm is using the working capital line to finance the export sales of their solar cell production systems to customers in Europe and Asia.
SierraTherm is a world leader in the design and manufacture of Conveyor Furnaces for Solar Cell Processing
Comerica Bank, an Ex-Im Bank delegated authority lender, provided the loan and will receive Ex-Im Bank's Guarantee when the loan is processed.
ConclusionConclusionConclusionConclusion
Ex-Im Bank supports short, medium, and long-term financing to creditworthy international customers, and working capital guarantees to U.S. exporters.
Ex-Im Bank enables U.S. exporters to arrange the most attractive source of credit directly for their customers.
Ex-Im Bank’s programs provide the most attractive financing option for foreign small- and medium-sized firms to purchase of U.S. goods and services
Ex-Im Bank is interested in any size project.
Internet http://www.exim.gov