EXIM Bank Trade Finance Solutions for Export Success! Mexican Geothermal Market Opportunities Workshop April 4, 2017

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1 EXIM Bank Trade Finance Solutions for Export Success! Mexican Geothermal Market Opportunities Workshop April 4, 2017

2 Export-Import Bank of the U.S. EXIM Bank is the official Export Credit Agency (ECA) of the U.S. Government. Mission: To support the financing of US exports to help create and sustain US jobs. Established in 1934 Headquartered in Washington, DC 12 Regional Offices nationwide Self-Sustaining Small Business Support: nearly 90% of activity

3 What We Do Products: Working Capital Guarantees (to fulfill export orders) Risk Protection (Export Credit Insurance) Term Financing (for buyers of equipment)

4 Eligibility Criteria U.S. Content Export items must be made in the U.S. Minimum 51% U.S. content is required Country Eligibility: Refer to the Country Limitation Schedule (CLS) at Reasonable Reassurance of Repayment (No Start-Up Risk) Credit Standards at

5 Working Capital Guarantee Provides a 90% guarantee of repayment (principal and interest) on short-term loans to support export activity. Assists companies in obtaining working capital to produce or purchase U.S. goods and services for export. May be Transaction-Specific, or a Revolving line of credit. No minimum or maximum amount check with your lender. Key benefits: Aggressive advances on export-related assets - Up to 75% on inventory - Up to 90% on foreign receivables (insurance may be required) - Standby L/Cs require only 25% collateral (vs. 100%)

6 Working Capital Guarantee

7 Short-Term Export Credit Insurance Benefits: RISK PROTECTION: in the event of non-payment Commercial & Political Risks (disputes are NOT covered) SALES TOOL: Empowers US exporters to offer competitive credit terms Up to 180 days (up to one-year for machinery/capital equipment) FINANCING AID: Obtain additional financing By assigning policy proceed to your lender Most banks will finance up to 90% of the invoiced amount, if insured

8 Short-Term Single Buyer Insurance Policy Insures a single sale or multiple sales to one buyer One-year policy period Private, Corporate-Sector Buyers: 90% Premium based on country risk, buyer classification, and credit term extended Charged on invoiced amount; payable monthly (only if there is export activity) Example: $100,000 export sale to Mexico: Up to 60-days: $840 (0.84% ) days: $1,060 (1.06%) days: $1,460 (1.46%) days: $1,700 (1.70%) days: $2,800 (2.80%) $500 minimum premium for small business exporters ($2,500 for mid-size/large corp.)

9 Medium-Term & Long-Term Financing Guaranteed loans made by commercial banks (U.S. or foreign) to an international buyer with a 100% unconditional repayment guarantee from EXIM Bank Used to finance buyers purchasing US-made capital equipment and/or related services Medium Term: Amounts up to $10 million; term typically up to 5-years Long-Term: Amounts over $10 million; term 5-12 years Minimum15% cash down-payment required; 85% max. financed amount Up to 30% local cost support within the U.S. scope of supply Interest rate and fees set by lender, based on 6-month Libor (currently 1.42%) EXIM Exposure Fee varies (risk-based), one-time, may be financed

10 Medium-Term Basic Financing Structure Sales Contract Amount: US $10,000,000 Less: 15% Downpayment: 1,500,000 Financed Portion: 8,500,000 Plus: EXIM s Exposure Fee: 261,800 (assume 3.8%; one-time fee) Total Financed Amount: $ 8,761,800 Payable in 10 equal semi-annual principal payments of US $876,180 plus accrued interest

11 Buyer Qualifications EXIM Bank can make a credit decision based on: 1) A corporate borrowing approach, based on the financial condition and existing business of the borrower or guarantor via analysis of: Audited financial statements, credit report, bank/trade references on borrower/guarantor Application of EXIM Bank s Medium-Term Credit Standards The corporate approach is the best approach for transactions of $10 million and under. 2) As Limited Recourse Project Finance with a special purpose company borrower and project cash flows as the primary source of repayment (most complex). Suitable for larger credits, typically above $20 million due to high due diligence costs. 3) Or, as a Structured Finance transaction with the borrower s balance sheet enhanced by special features. Can be a useful approach for loans up to $20 million

12 Medium Term Example: Geothermal Services Ex-Im Bank can support the financing of US equipment exports or stand-alone services contracts. POWER Engineers, Inc., an engineering consulting firm based in Hailey, Idaho, won a contract to provide design and engineering services to a 45-mw geothermal power plant in Western Turkey. Ex-Im Bank approved a $4.86 million loan guarantee Toronto-Dominion Bank made the loan, backed by Ex-Im Bank s 100% guarantee. This transaction qualified for longer repayment terms of 15-years under the Bank's special initiative to support exports of renewable energy and water projects. Approval based on corporate-borrowing approach: buyer s creditworthiness (ability to meet EXIM s Medium-Term Credit Standards)

13 Direct Loans Term financing made directly by EXIM Bank to an international buyer Buyer submits the application to EXIM Bank Similar structure to loan guarantee program: 15% minimum downpayment required; max. financed amount 85% of contract Generally for credits over $5 million Commitment fee of 0.5% on unused portion of the loan Must comply with US flag shipping requirements (if ocean shipment) Fixed interest rate, which varies according to the loan s repayment term: 5 to 8.5 years: 2.9% Over 8.5 to 12 years: 3.22% Over 12 to 18 years: 3.42% 3.62% For Exposure Fee indications:

14 Direct Loan Example: Ormat Leyte Ex-Im Bank made a direct loan of $49.7 million to Ormat Leyte Co. Ltd., to build, own and operate four geothermal plants 530 km from Manila. Philippine Nat l. Oil Company (PNOC) signed a contract with Ormat to purchase power from the new plants. The commercial obligations under the contract were fully supported by Government of the Philippines. Ormat provided 25% in equity totaling $16.7 million; EXIM Bank supported the remaining 75% as the sole senior lender. Project had a number of important strengths: - supported by Government of the Philippines. - Ormat equipment has a record of reliable performance. - The engineering evaluation showed the geothermal fields to be a reliable power source, generating a high volume of steam. - Project's revenues are mostly denominated in U.S. dollars, to cover dollar-based fixed charges such as debt service.

15 Contact a Regional Office Near You EASTERN: Miami: New York: Atlanta: CENTRAL: Chicago: Houston: Minneapolis: Detroit: Dallas-area: WESTERN: Irvine, CA: San Diego: San Francisco: (Rob Guthrie) Seattle:

16 EXIM Contacts for International Buyers INTERNATIONAL BUSINESS DEVELOPMENT: Kate Bishop: PROJECT FINANCE: Craig O Connor: craig.oconnor@exim.gov

17 Sandra Donzella Deputy Managing Director, Western Region T: Export-Import Bank of the United States