Ex-Im Bank:Exporting to ANESA

Jan Blaho, Business Development Officer, Midwest

May 12, 2010

Who are we and what do we do?

Mission: Support US exports in order to create andsustain US jobs

Ex-Im Bank is an independent agency of the UnitedStates government

Established in 1934

Headquartered in Washington, DC

5 regional business development offices, plus4 satellite locations (Dallas, San Diego, SanFrancisco and Washington D.C.)

Foreign Export Credit Agencies compete with Ex-ImBank

EDC CanadaECGD UKCoface FranceEulerHermes GermanyJBIC JapanSace ItalyKEIC, Keximbank S. KoreaOeKB AustriaEfic Australia

We have foreign competitors that have similar support

The National Export Initiative is a White House priority.

“Third, we need to export more of our goods. Becausethe more products we make and sell to other countries,the more jobs we support right here in America. Sotonight, we set a new goal: We will double ourexports over the next five years, an increase thatwill support two million jobs in America. To helpmeet this goal, we're launching a National ExportInitiative that will help farmers and small businessesincrease their exports, and reform export controlsconsistent with national security.”

“We have to seek new markets aggressively, just as ourcompetitors are. ”

President Barack ObamaState of the Union AddressJanuary 27, 2010

Exports are a small component of US GDP

Export Leaders, 2009

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

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0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

50.00%Exports (millions USD)

Exports/GDP (%)

Where does Minnesota export?

Source: http://tse.export.gov/

In Thousands USD

Ex-Im Bank supports Minnesota exporters!

Export-Import Bank's 5-Year Impact(Fiscal Year 2006 thru 2010)

• Companies Supported - 111• Communities Supported - 49• Value of Exports Supported - $737.96 million

Export-Import Bank's FY 2009 & FY 2010Impact

• Value of Exports Supported - $68.92 million (FY2009) $165.35 million (FY 2010)

Minimize risks

Provide a Marketing Advantage

Supplement commercial financing

Ex-Im Bank helps US companies

Ex-Im Bank helps overseas buyers of US goods andservices

Improved Cash Flow– Supplemental Liquidity

Lower Interest Rates– Loan Guarantees lessen the interest rate commercial

lenders require

Extended Terms– Longer payback periods than typically available on the

market

Establish Credit Record– Through carefully designed repayment structure

supported by local banks and sovereign guarantees

Ex-Im Bank has 7 primary financing products

Short-Term FinancingShort-Term Financing

Medium & Long-TermMedium & Long-TermFinancingFinancing

•• Export Credit Insurance Export Credit Insurance

•• Working Capital Guarantees Working Capital Guarantees

TermTerm SolutionsSolutions

•• Export Credit Insurance Export Credit Insurance

•• Commercial Loan Guarantees Commercial Loan Guarantees

•• Direct Loans Direct Loans

•• Project/Structured Finance Project/Structured Finance

•• Transportation (Aircraft) Transportation (Aircraft)

Ex-Im Bank support covers the spectrum

Pre-ExportFinancing

Post-ExportFinancing

Working CapitalGuarantees

InsuranceGuarantees

Direct Loans

Pre-Export Financing for yourUS company: WorkingCapital Guarantee Program

A Working Capital Guarantee is for US companies

• This is a guarantee to a commerciallender which makes a loan to an exporter topurchase or manufacture US goods andservices for export

A Working Capital Guarantee assists small and mediumsized companies

Assists small and mid-size companies in obtaining workingcapital to produce or purchase US goods and services for export

Provides a 90% guarantee of repayment (principal and interest)on loans to exporters

May be set up as “Transaction-Specific” or a “Revolving” Line ofCredit

No minimum or maximum amounts

Loan supports advances made against export-related inventory(including WIP) and foreign receivables:

Up to 75% advance rate on inventory, and up to 90% onforeign receivables

Working Capital Guarantees must be creditworthy

Asset-Based: fully collateralized

Personal guarantees are required of owner(s)

Cost:

$100 application fee

Up to 1.5% facility fee – Reduced fee if:

Exports sales structured under L/Cs and/or secured byexport credit insurance; exporter’s financial ratios arewithin its industry median

A lower fee may be negotiated with a “Delegated Authority”Lender (see list on www.exim.gov)

Interest rate is determined by the lender

Working Capital Guarantee increases your borrowingpower

The Robbins Company is a success story

Challenge:

•Small business, manufacturer of hard-rock tunnel-boringmachines, needed more financing than its bank couldprovided to fulfill the largest order in the company’shistory.

Solution:

•Company received a $25 million loan facility backed by anEx-Im Bank working capital guarantee to support stand-byL/Cs to secure the advance payments made by the Indiancustomer.

Result:

•The firm was able to accept the $131 million contract, andadded 50 new employees.

POST exportfinancing for youroverseas buyers

There must be three elements to an Ex-Im Banktransaction … the three “C’s”

√ Cover Policy: We must be open in thebuyer’s country.

√ Content: The U.S. Export must havesignificant U.S. content.

√ Creditworthiness: The transactionmust have a reasonable assurance ofrepayment.

√ Cover P0licy: Where is Ex-Im Bank Available?

Short-term

Sector(s) Open

Medium-term

Sector(s) Open

Long-term

Sector(s) Open

Open for

Specially

Financed

Transactions

Afganistan Yes

Algeria Public & Private Public & Private Public & Private Yes

Egypt Public & Private Public & Private Public & Private Yes

Ghana Public & Private Public & Private Public & Private Yes

India Public & Private Public & Private Public & Private Yes

Iraq Yes

Israel Public & Private Public & Private Public & Private Yes

Jordan Public & Private Public & Private Public & Private Yes

Kenya Public & Private Public & Private Public & Private Yes

Kuwait Public & Private Public & Private Public & Private Yes

Lebanon Public & Private Public & Private Yes

Lybia Public & Private Public & Private Public Yes

Morocco Public & Private Public & Private Public & Private Yes

Nigeria Public & Private Public & Private Public & Private Yes

Pakistan Public & Private Public & Private Public & Private Yes

Qatar Public & Private Public & Private Public & Private Yes

Saudi Arabia Public & Private Public & Private Public & Private Yes

Senegal Public & Private Public & Private Private Yes

South Africa Public & Private Public & Private Public & Private Yes

United Arab

EmiratesPublic & Private Public & Private Public & Private Yes

√ Content: We have a “made in the USA” ContentPolicy

• Export must be exported from the United States

• 51% U.S. content for short-term transactions

• up to 85% U.S. content for medium/long-termtransactions (OECD driven)

• Services must be performed by US-basedpersonnel, either in the US or in the “host”country

√ Creditworthiness: Credit standards differ for publicand private sector transactions

Public Sector Transactions:– Ex-Im Bank will most likely require a Ministry of

Finance Guarantee

Private Sector Transactions:– For transactions over a million USD, Ex-Im Bank

requires three years of audited financialstatements

– Ex-Im Bank’s credit standards are on our website:http://www.exim.gov/tools/credit_stds.cfm

– If credit standards cannot be met, Ex-Im Bankwould need other credit enhancements such as alocal bank guarantee.

Short-Term ExportCredit Insurance

Short-Term Export Credit Insurance allows you to extendcredit with little risk

Buyer

Ex-Im Bank

Exporter

CommercialContract

Ex-Im BankInsurance

Open Account Terms

Repayment

Ex-Im BankInsurance

Application

Other Short-Term Policies:

Single-Buyer (exporter)

Multi-Buyer (exporter)

Bank Letter of Credit (bank)

Financial Institution Buyer Credit (bank)

Exposure fee advice tables explain the costs

The application for ST Insurance is three steps

The following are the required steps to obtain an Export CreditInsurance policy:

U.S. exporter and international buyer negotiate a salescontract;

International buyer supplies the U.S. exporter withfinancial information, as required by Ex-Im Bank’s creditstandards.

U.S. exporter submits insurance application to Ex-ImBank, which includes requisite financial informationreceived from the buyer.

Medium and Long-Term Loan Guaranteesand Direct Loans

Ex-Im Bank has a Medium/Long-Term ForeignContent Policy

For medium- and long-term financing, Ex-Im Bank willsupport the following amounts:

▪ 85% of the contract price if eligible foreign content is15% or less

▪ Greater than 15% eligible foreign content, Ex-Im willsupport U.S. content only

A Loan Guarantee involves several partners

U.S.Supplier

EX-IMBank

OverseasBuyer

Bank: U.S./

International

Payment

Goods & Services

Insurance/Loan GuaranteeApplication

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Ex-Im Bank Guarantee

GuarantorBank or Corp

Ex-Im Bank has established the India InfrastructureFacility with nine banks

Ex-Im Bank provided $2.45 billion medium- andlong-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• Punjab National Bank.

Ex-Im Bank has also established a $1 billion NigerianBanking Facility

www.unionbankng.comUnion Bankwww.oceanicbanknigeria.comOceanic Bank

www.intercontinentalbankplc.comIntercontinental Bankwww.afribank.comAfribank

www.diamondbank.comDiamond Bankwww.gtbplc.comGuaranty Trust Bank (GTB)

www.firstbanknigeria.comFirst Bankwww.fidelitybankplc.comFidelity Bank

www.skyebanking.comSkye Bankwww.firstcitygroup.comFirst City Monument

www.zenithbank.comZenith Bankwww.ibtc.com

Stanbic Investment Banking & TrustCompany (IBTC)

www.ecobank.comEcobankwww.accessbankplc.comAccess Bank

Ex-Im Bank Exposure Fee Calculator assistswith the fee structure

See: http://www.exim.gov/tools/fee_calc.html

Applications for Medium-Term financing is also threestepsThere are three steps to approaching Ex-Im Bank:

U.S. exporter and international buyer negotiate a sales contract;

International buyer and/or U.S. exporter identify a financinginstitution to provide the loan (commonly a U.S. bank, but foreignbanks willing to lend U.S. dollars can also apply);

Lending institution submits final application to Ex-Im Bank forreview and approval.

Letter of Interest (Eligible Applicants: Anyone)▪ To initiate financing discussions with lending institutions or to

complement financing proposals for competitive bids, U.Sexporters and importers can obtain an Ex-Im Bank Letter ofInterest (LI) to assist in negotiations for medium- and long-termtransactions.

▪ The LI indicates the Bank's willingness to consider a financingoffer if sale is completed. An LI can be issued within seven days ofa request for financing and remains in effect for six months.

Ex-Im Bank has several main policies

• Environmental transactions can received extendedterms up to 18 years

• Shipping on US Flag carrier (Only for All DirectLoans and Guarantees over $20 million)

• Foreign content (eligible vs. ineligible)• Used Equipment Questionnaire• Local Costs -> Ex-Im Bank can support up to 30%

of the US contract value in costs incurred in thebuyer’s country

• Military -> Ex-Im Bank cannot consider Militaryexports

Minnesota and Exporting equals success

Siemens Power Transmission & Distribution, Inc.,EMIS-Division, (SPTD EMIS), Minneapolis, MN

• Product: $35 million long-term loan guarantee• Export: software and services• Buyer: Israel Electric Corp. Ltd. (IEC)• Guaranteed lender: BNP-Paribas, New York, NY.

Minnesota Small Business

• Exporter: Dom-Ex Inc. in Hibbing, MN• Product: used Caterpillar trucks and new construction

equipment and spare parts• Buyer: Concasseur Basalte du Ndiambour in Dakar, Senegal• Product: $2.1 million medium-term guarantee from Ex-Im

Bank