PROVIDING KEY READY SOLUTIONS Telephone: PROJECT FINANCING SOLUTIONS FROM NORWAY

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1 PROVIDING KEY READY SOLUTIONS Telephone: post@keyreadysolutions.com PROJECT FINANCING SOLUTIONS FROM NORWAY

2 1. Introductions 2. Application process 3. Loan requirements 4. Key terms & conditions 5. Interest rates 6. Example financial term sheet 7. Time line 8. Project & loan documentation 9. Case studies CONTENTS 2 KEY READY SOLUTIONS

3 FINANCING YOUR PROJECT We offer medium to long-term loans for your purchase from Norway. Grow your business by obtaining credit for up to 10 years. Choose between competitively-priced fixed and variable interest rates between % Ari Mathiesen MANAGING DIRECTOR We look forward to do work with you and successfully help you finance your project. Receive financing for up to 85% of the export contract value trough GIEK and even up to 100% with International banks. Get access to financing directly from the Norwegian government in all market conditions Preserve your existing bank lines for local financing requirements, such as working capital ABOUT US KEY READY SOLUTIONS 3

4 INTRODUCTION TO GIEK INTRODUCTION TO EXPORT CREDIT NORWAY GIEK is a government owned institution in Norway. GIEK can issue different kind of state guarantees to leverage loans to clients of Norwegian Exporters. A guarantee can be issued for loans to buyers of capital goods and services from Norwegian exporters. The most used guarantee product is the buyer credit guarantee, which covers loan to the foreign buyer. When there is a well defined project GIEK can after receiving an application from the client issue a state guarantee that normally will give access to a loan in the Norwegian state bank Eksport Kreditt AS or international banks or both. If the client is a public entity GIEK can garuntee up to 85% of the project. If the client is a private company the rates from GIEK can guarantee up to 76,5% of a project. The requirement on equity is normally %. The interest rates are very low and normally between 4-6% and up to 10 years down payment. A limited liability company wholly owned by the Norwegian government, Export Credit Norway extends export financing to buyers of capital goods and services from Norwegian suppliers. For exporters, we provide a strong sales argument that can help secure the next export contract. For customers of the Norwegian export industry, we offer medium to long-term financing on attractive terms. We finance export contracts ranging in value from a few million to several billion NOK, across a variety of sectors and worldwide. Our loans comply with the OECD framework on officially supported export credit and are guaranteed by Guarantee Institute for Export Credits (GIEK), and/or accept-able financial institutions. Export Credit Norway is a customer-oriented organisation and strives to deliver the highest level of service. Please get in touch to discuss how we might support your project.

5 THE SOLUTION /Banker /Banker KRS Contractual delivery of goods and services Export Credit Norway Loan GIEK and / or Bank Loan Guarantee Risk Client / Buyer / Borrower KEY READY SOLUTIONS 5

6 APPLICATION PROCESS

7 6 Steps in aquiring a loan KRS AND BUYER SIGN THE EXPORT CONTRACT EXPORT CREDIT NORWAY ADMINISTERS THE LOAN KRS OR BUYER SUBMITS LOAN APPLICATION BEFORE EXPORT CONTRACT AWARD Contact one of our relationship managers, providing details of the prospective export contract and project or purchase to be financed EXPORT CREDIT NORWAY ISSUES INDICATIVE TERM SHEET Based on the application, Export Credit Norway prepares an indicative term sheet, outlining key terms and conditions and quoting fixed CIRR interest rates. KRS may attach the indicative term sheet to its bid or sales pitch GUARANTORS CONDUCT CREDIT ASSESSMENT Loans from Export Credit Norway must be guaranteed by the Norwegian Guarantee Institute for Export Credits (GIEK) and/or acceptable financial institutions. The guarantors will issue loan guarantees in favour of Export Credit Norway after they have conducted a favourable credit assessment of the project and the borrower. Export Credit Norway cooperates closely with the Norwegian Guarantee Institute for Export Credits (GIEK) and a range of Norwegian and international banks EXPORT CREDIT NORWAY NEGOTIATES LOAN AGREEMENT WITH THE BORROWER Provided the prospective loan is approved by Export Credit Norway s credit committee and/or board, loan agreement negotiations begin. The loan documentation will incorporate Export Credit Norway s terms and conditions, as well as the terms and conditions set by the guarantors Export Credit Norway may also participate in syndicated loan transactions, collaborating with several other lenders on one common loan agreement EXPORT CREDIT NORWAY DISBURSES THE LOAN Export Credit Norway disburses the loan, typically directly to KRS, subject to the terms and conditions in the loan agreement. Disbursement is made after KRS has made part or final delivery of the agreed product or service to the borrower Export Credit Norway manages the relationship with the borrower during the life-time of the loan KEY READY SOLUTIONS 7

8 LOAN REQUIREMENTS GIEK REQUIREMENTS Minimum 30 % Norwegian content in export contract Local costs can not be more than 25 % of the export value of the contract Minimum 15 % cash payment of contract Standard downpayment terms (there are exceptions): Minimum 2 years; 5 years is standard, maximum 8,5 years First downpayment 6 (or 12) months after starting point of credit Half yearly downpayments Up-front risk premium payable to GIEK (can be financed) Credit risk of debtor must be acceptable

9 Loans from Export Credit Norway must be guaranteed by the Norwegian Guarantee Institute for Export Credits (GIEK) and/or financial institutions at all times. This means that the guarantors guarantee that they will compensate Export Credit Norway for any losses arising in a situation where the borrower is unable to service the loan. The borrower will need to pay a guarantee premium to the loan guarantors in return for their assumption of this risk. Typically, the financial institutions involved in such arrangements are commercial banks, but may also include insurance companies. The guarantors must have a long-term credit rating of at least BBB, and be approved by Export Credit Norway.

10 KEY TERMS & CONDITIONS INTEREST RATES The funding of loans is provided by the Norwegian government. Loans with Commercial Interest Reference Rates (CIRR) are available in all OECD cur-rencies. Export Credit Norway quotes fixed CIRR rates before an export contract has been entered into Loans with market-based interest rates are offered as an alternative to CIRR rates Provided the borrower chooses a market-based floating interest rate during the drawdown period, the choice between CIRR and market-based interest rates during the repayment period may remain open until final drawdown. At that point, the bor-rower may compare the fixed CIRR rate to the market-based interest rate, and opt for the more attractive of the two. REPAYMENT The loan repayment period varies from two to 18 years depending on the project type. The maximum repayment periods are as follows: For capital goods: 8.5 years For projects in developing countries: 10 years For ships and ship equipment: 12 years For project funding: 14 years For renewable energy and water supply and sewerage projects: 18 years FINANCING FOR UP TO 85 % OF THE CONTRACT VALUE Capital goods and renewable energy projects: financing of up to 85% of the contract value. Ships and ship equipment: up to 80% of the contract value. SIMPLER AND LESS COSTLY PROCESSING OF SMALLER TRANSACTIONS For selected loans of up to NOK 30 million we offer a simplified documentation pro-cess, subject to the guarantors approval. The loans are then evidenced by negotiable promissory notes in lieu of fully-fledged loan agreements, which reduces transaction costs, mainly related to legal fees, payable by the borrower. COMPLIANCE WITH INTERNATIONAL RULES FOR EXPORT CREDITS Loans extended by Export Credit Norway comply with the OECD Arrangement on Officially Sup-ported Export Credits, which inter alia regulates CIRR interest rates and maximum repayment periods. OTHER KEY TERMS Export Credit Norway must receive the loan application before the export contract is signed Norwegian content must account for at least 30% of the export contract value. Deliveries from companies based in Norway or companies abroad under Norwegian majority control generally qualify as Norwegian content Local costs cannot exceed 30% of the sum of Norwegian and third country content in the export contract All loans must be 100% guaranteed by GIEK and/or financial institutions with satisfactory credit ratings Export Credit Norway applies internatio ally-agreed guidelines for environmental and social impact, as well as anti-corruption measures

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12 INTEREST RATES Export Credit Norway offers two interest-rate alternatives: Fixed interest rates set by the OECD once a month, referred to as Commercial Interest Reference Rates (CIRR). Interest rates on commercial terms in accordance with current market prices, most commonly a reference rate such as LIBOR plus a fixed margin. The offered interest rate must comply with the rules on state subsidies. We quote CIRRs in an indicative term sheet before the export contract is concluded. The applicable interest rate is finally set on the date the export contract is signed. The interest payable to Export Credit Norway does not include the guarantee premium payable to the loan guarantors. This will be set in accordance with the guarantors assessment of political and commercial risks relating to the project or the company being funded. The total payable interest rate thus equals the interest payable to Export Credit Norway plus the guarantee premium payable to the guarantors.

13 Pre contract CIRR rates Renew. Loans with attractive interest rates CIRR (fixed) or market loans TENOR: <5 yrs 5,5-8,5 yrs 9-12 yrs 15 yrs 18 yrs NOK 2,04 2,04 2,04 2,58 2,81 USD 2,34 2,72 3,05 3,33 3,49 EUR 0,85 1,09 1,40 1,74 2 KEY READY SOLUTIONS 13

14 EXAMPLE FINANCIAL TERM SHEET Indicative financial term sheet for a client project in East Africa. We indicate a 100% financing of a contract between KRS with Partners and the Client. If the Client do want to finance the contract with own funds or other loans, it is acceptable to utilize our indicated financing as part of the total financial package. We can arrange the financing as a facility where the borrower only draw what is needed, but limited to 100% of the contract included financial costs. It is, of course, also acceptable to utilize the export credit portion as a stand-alone facility. 85% will be provided through an export credit from Norway and 15% will be provided through a commercial bank. A construction period of up to 1 year is indicated, but could be extended. The repayment period will start 6 months after construction period. All financial cost (guarantee premium, interest during construction, bank fees) may be included in the financing. A) Export Credit Portion 85% of contract Contract: A contract between KRS and the Client Facility type: Export credit secured by payment guarantee Borrower: The Client or Owner of the Client Guarantor: The Client or Owner of the Client Buyer: Lender: Supplier: Guarantee: the Client Eksportkreditt, Norway or International Bank KRS as main contractor and sub-suppliers advised by the main supplier Payment guarantee from the Norwegian Guarantee Institute for Export Credits (GIEK) cover 100% of the loan, interest, default interest as well as any other agreed costs. The indicated premium will be calculated on the loan amount and paid up front as one single payment, but can be included in the financing. The premium is calculated based on a construction period of 1 year and repayment periods mentioned below: 10 years: 11.9% Disbursements: At or after the date of delivery, in accordance with the payment terms of the commercial contract. Dibursements will be made directly to the supplier. Repayment: Interest: The repayment will be made in up to 10 years in up to 20 consecutive, equal semi-annual instalments, the first one due 6 months after final disbursement. Floating rate: The borrower may choose from all major currencies. The quote will be as 6 months LIBOR % p.a. The 6 months LIBOR interest rates dated were:

15 EUR: % p.a. USD: 0.85% p.a. Fixed market rate: Fixed market rate is also available for all currencies. CIRR is provided through the MoF, Norway. Interest rates dated were: EUR USD 10 years repayment: 1.30% p.a. 3.04% p.a. Commitment fee: 0,8 % p.a. calculated on the committed, but not disbursed market term loan, payable on the interest payment dates, in arrears. Agent fee: B) 15% Commercial Bank Loan To be agreed upon between the borrower and the agent bank, payable by the borrower. Indication will be 0.8% flat calculated on the loan amount. Indicative terms for the loan will be as follows: Contract: Borrower: Guarantor: Lender: Supplier: Maturity period: Interest: Upfront fee: A contract between KRS and the Client The Client or the Owner of the Client The Client or the Owner of the Client International or local bank KRS as main contractor and sub-suppliers advised by the main supplier Up to 5 years. Longer maturity may be negotiated. 6 months USD or EUR Libor + a margin up to 5.00 % p.a. 1.0% flat Presentation of the GIEK premium as a pro anno margin. Payment guarantee from the Norwegian Guarantee Institute for Export Credits (GIEK) cover 100% of the loan, interest, default interest as well as any other agreed costs. The indicated premium will be calculated on the loan amount and paid up front as one single payment, but can be included in the financing. The premium is actually a pro anno margin (% p.a.) that is discounted to one up front fee. Therefore, the premium for SU/Uganda can also be presented as a margin of 2.6% p.a. if we use a discount rate of 4% p.a., which is equal to OECD s calculation. The premium of 11.9% is calculated based on a construction period of 1 year and repayment period of 10 years. Export Credit: GIEK premium: 11.9 flat up front Interest on loan: CIRR USD/EUR Equals the following loan based on pro rata basis Commercial loan USD GIEK premium pro anno (2.6%) + CIRR (3.04% p.a.) = 5.64 % p.a. EUR GIEK premium pro anno (2.6%) + CIRR (1.30% p.a.) = 3.90 % p.a. Therefore, our indicated export credit is competitive with all loans (10 years repayment + 1 year s drawdown) with a higher interest rate than 5.64% p.a. for USD and 3.90% p.a. for EUR. It is important to mention that this is a fixed interest for the total construction and repayment period, all cost included. The customer can also choose floating interest as indicated above

16 TIME LINE The timeline from the application of financing and disbursement of the loan depends on multiple factors, including the complexity of the project, legal conditions in the customer s (borrower s) home country, the borrower s creditworthiness and the requirements and terms imposed by the guarantors. The loan is disbursed after you have delivered your good or service to the customer. Export Credit Norway strives to process loans as efficiently and quickly as possible. The guarantors credit assessment of your customer, the negotiation of the loan agreement and the collection and completion of the loan documentation are the most time-consuming steps in the loan process.

17 Typical KRS project Normally 1-2 months Normally 1-3 months Normally 4-12 months Total between 6-17 months Initial phase Pre-Project phase Time 2 Main Project phase First contact Customer requirements Produce layout building Indicative offer/pricing Detailed specs Architectural plans Master plan Proposal Greenlight project 1-4 months GIEK & Export Credit application process 1-4 months production time The minimum project time is 1+1+4=6 months The maximum project time is =17 months 1-2 months shipping time 1-2 months mounting time KEY READY SOLUTIONS 17

18 PROJECT & LOAN DOCUMENTATION

19 Export Credit Norway s loan documentation comply with recognised international standards. The loan agreement will contain our general terms and conditions, as well as terms and conditions set by GIEK/the guarantors for each individual loan transaction. For loans totalling less than NOK 30 million, Export Credit Norway and GIEK have developed simplified documentation to facilitate cheaper, quicker establishment of loans. In some cases, we may offer simplified documentation, whereby the loan is documented by means of a negotiablea promissory note instead of an ordinary loan agreement. These are examples of the kinds of documents we may request in the process: Company documents (certificate of registration, articles of association, authorisation to sign, copy of passport, board resolution approving the loan) Licenses, authorisations, public approvals for the project If relevant: public approvals for the loan, issue of parent company guarantee/other guarantees/pledges of assets as security /promissory notes, etc. If relevant: registrations of public approvals for the loan/issue of guarantees, pledges of assets as security and promissory notes, if required by the legislation of the country in which the borrower is resident If relevant: documentation relating to the environmental and social requirements applicable to the project, including impact assessments (environmental and social impact analyses) and necessary certifications Confirmation from a lawyer in the borrower s country that all local conditions/conditions relating to the borrower for taking up a loan from Export Credit Norway are met, i.e. that there are no legal/public-law obstacles to the establishment of the loan APPLICATION INFORMATION 1. Guarantee applicant. Name, address, financial information, contact person and contact details. A comprehensive Web page will do the rest 2. Exporter. Often the same as nr.1 3. Buyer. Contact person and contact details. A comprehensive Web page will do the rest 4. Borrower, if other than buyer 5. Will there be any external guarantor 6. Contract. Amount, currency, payment terms, time schedule, 7. Environmental aspects. Presume nothing on your projects 8. Agent. Role, payment terms, success fee etc. Very important to do the KYC seriously PROJECT INFORMATION 1. Background for the project. Motivation for buyer, reason for exporter to offer, 2. Description of the market and rationale for the project. Value for money? 3. Structure with description of all parties and agreements between them. Role, scope of works etc. 4. EPC contract. Supplier s scope and value and origin. Especially Norwegian and local content important to calculate. Other countries may be important to be able to use the Export Credit Agencies in the respective country. 5. General description of the project. Technical and commercial Here it is important to understand that financial institutions do not know anything about the project. Here we need to teach them. Information of the sector, sector that the project shall operate in. Here it may be necessary describe the total project if your contract is dependent on other contracts or byers own work.

20 CASE STUDIES Exporter Scatec Solar AS Exporter Kongsberg Maritime AS. Purchaser A project company in South Africa in which Scatec Solar is the controlling shareholder. Purchaser Geobam Trading Ltd, Cyprus Case Scatec Solar AS has delivered and is a part-owner of the 75 MW Kalkbult solar power plant in South Africa s Northern Cape province. Case Export Credit Norway has made a loan of USD 2,070,000 (85% of the contract sum), at a fixed interest rate of 1.67%. The repayment period is five years. Guarantee types GIEK has issued three bond guarantees: 1. Pre-payment guarantee: issued to the purchasing company in South Africa. Amounted to 15% of the value of the power plant delivery contract. 2. Completion guarantee: issued to the purchasing company. Amounted to 10% of the contract value. Guarantee types GIEK is guaranteeing 90%, while DNB is guaranteeing the remaining 10%. The Kongsberg Group has provided a counter-guarantee for one-third of GIEK s risk. Lender s guarantee Guarantee sum 3. Equity guarantee: issued to the lender by way of security for the payment of Scatec Solar s share of the equity capital in the purchasing company. ZAR 488 million (approximately NOK 282 million) Guarantee sum USD 1,863,405

21 Exporter Purchaser Skeie AS Premium Entertainment GmbH, Germany Case GIEK is guaranteeing 90%. SpareBank 1 SR Bank is guaranteeing 10%. The size of the loan meant that simplified loan documentation could be used. Guarantee types Export Credit Norway has made a loan of EUR 755,000 (70% of the contract sum). The repayment period is three years. Lender s guarantee Guarantee sum EUR 680,100

22 KRS KEY.READY.SOLUTIONS Ronatoppen 63A, 4638 Kristiansand S Norway post@keyreadysolutions.com