India Trade Conference - July 29, 2010

Special Financing Options for

Environmental Exports

Special Financing Options for

Environmental Exports

Rob GuthrieBusiness Development Specialist

Office of Renewable Energy & Evironmental Exports

Export-Import Bank of the U.S.Export-Import Bank of the U.S.Export-Import Bank of the U.S.Export-Import Bank of the U.S.

Independent, Independent, self-fundingself-funding agency of the U.S. government agency of the U.S. government since 1934; profitable!since 1934; profitable!

MISSIONMISSION: : U.S. JOBS THROUGH EXPORTSU.S. JOBS THROUGH EXPORTS

86% of all companies supported are small businesses86% of all companies supported are small businesses

Provides: Provides: ▪ Working Capital GuaranteesWorking Capital Guarantees▪ Export Credit Insurance Export Credit Insurance ▪ Loan Guarantees Loan Guarantees ▪ Direct LoansDirect Loans

Eligibility CriteriaEligibility CriteriaEligibility CriteriaEligibility Criteria

U.S. ContentU.S. Content▪ Short-term transactions: 51% minimum▪ Medium/long-term transactions: only U.S.

content, up to 85%

No Defense ArticlesNo Defense Articles▪ Exceptions may be made for humanitarian

purposes, drug interdiction, & dual-use items

Country EligibilityCountry Eligibility▪ Support available in over 155 countries▪ Restrictions may apply for political or

economic reasons▪ Refer to the Country Limitation Schedule

(CLS) at www.exim.gov

Environmental Exports ProgramEnvironmental Exports ProgramEnvironmental Exports ProgramEnvironmental Exports Program

▪ Created in 1994Created in 1994

▪ In FY 2009, supported $640 million exports of In FY 2009, supported $640 million exports of environmentally beneficial goods and servicesenvironmentally beneficial goods and services

▪ Created the Office of Renewable Energy & Created the Office of Renewable Energy & Environmental Exports in 2008Environmental Exports in 2008

Environmental Exports ProgramEnvironmental Exports ProgramEnvironmental Exports ProgramEnvironmental Exports Program

EnhancementsEnhancements::

▪ Terms of up to Terms of up to 18 years18 years for renewable for renewable energy and water treatment projectsenergy and water treatment projects

▪ Up to Up to 30% local cost 30% local cost support within the U.S. support within the U.S. scope of supplyscope of supply

▪ Capitalization of interest during Capitalization of interest during constructionconstruction

▪ Grace periods of up to Grace periods of up to 18 months18 months

Ex-Im Bank and IndiaEx-Im Bank and India

Ex-Im Bank's current financing to India totals $5.9 billion.

Of this $5.9 billion, $2.2 billion in loan guarantees for Indian transactions were booked in 2009 alone.

India is now Ex-Im Bank’s second largest ‘customer,’ after Mexico ($7.8 billion).

Ex-Im Bank has a number of Indian renewable energy projects in its pipeline of credit applications.

Working Capital GuaranteeWorking Capital GuaranteeWorking Capital GuaranteeWorking Capital Guarantee

Ex-Im Bank provides 90% repayment guarantee for Ex-Im Bank provides 90% repayment guarantee for working capital loans, revolving or transaction-based, working capital loans, revolving or transaction-based, made by commercial lenders to U.S. companies to made by commercial lenders to U.S. companies to finance foreign purchase orders.finance foreign purchase orders.

Enables exporters to finance Enables exporters to finance export-boundexport-bound materials, materials, labor, and overhead to produce goods/services for labor, and overhead to produce goods/services for export: 100% collateral.export: 100% collateral.

May be used to cover stand-by letters of credit for bid May be used to cover stand-by letters of credit for bid and performance bonds: 10% collateral.and performance bonds: 10% collateral.

Expand Your Borrowing Base!Expand Your Borrowing Base!Expand Your Borrowing Base!Expand Your Borrowing Base!

Example: United Solar OvonicExample: United Solar OvonicExample: United Solar OvonicExample: United Solar Ovonic

In Feb. 2008, Ex-Im Bank guaranteed a $25 million revolving working capital credit line for United Solar Ovonic of Auburn Hills, MI (uni-solar.com).

The credit was guaranteed under Ex-Im Bank’s ‘delegated authority' Working Capital Guarantee Program that helps small and medium-sized businesses obtain larger working capital loans in less time.

Example: United Solar OvonicExample: United Solar OvonicExample: United Solar OvonicExample: United Solar Ovonic

Export Credit InsuranceExport Credit InsuranceExport Credit InsuranceExport Credit Insurance

Enables U.S. exporters to offer short- and medium-term Enables U.S. exporters to offer short- and medium-term credit credit directly to their customers.directly to their customers.

Credit insurance is an attractive substitute to Credit insurance is an attractive substitute to cash-in-advance, letters of credit, and local bank cash-in-advance, letters of credit, and local bank financing.financing.

Using Ex-Im Bank to Using Ex-Im Bank to insure a letter of credit instead of insure a letter of credit instead of paying bank confirmation chargespaying bank confirmation charges is usually more is usually more cost-effective.cost-effective.

Example: SunivaExample: SunivaExample: SunivaExample: Suniva

Suniva, Inc. of Norcross, GA manufactures high-efficiency solar cells and modules, and exports worldwide (suniva.com).

Ex-Im Bank’s Short-Term Credit Insurance enables Suniva to offer open account credit terms to its distributors.

Replaces bank financing (letter of credit), enabling its distributors to offer credit to their customers.

Example: SunivaExample: SunivaExample: SunivaExample: Suniva

Credit Insurance: Cost to Suniva:

▪ 60 days - 0.55%

▪ 90 days - 0.90%

▪ 180 days - 1.15%

▪ 360 days - 1.77%

Example: SunivaExample: SunivaExample: SunivaExample: Suniva

Financing Alternatives:

▪ Cash in advance: may be too expensive

▪ Foreign letters of credit carry interest rates of 10 – 25% per annum: much less affordable

▪ Private-sector insurance: it’s available, but it’s typically much more expensive; does not cater to small businesses

Suniva:: Karnataka, India Project

Buyer Loan Guarantee ProgramBuyer Loan Guarantee ProgramBuyer Loan Guarantee ProgramBuyer Loan Guarantee Program

Guaranteed Loans:Guaranteed Loans: made by commercial banks (U.S. made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% or foreign) to a foreign buyer with a 100% unconditional unconditional repayment guarantee from Ex-Im repayment guarantee from Ex-Im Bank.Bank.

▪ Coverage: 85% of the U.S. contentCoverage: 85% of the U.S. content

▪ NegotiatedNegotiated interest rates, usually a floating rate interest rates, usually a floating rate based on spread over 6-month U.S. dollar LIBOR based on spread over 6-month U.S. dollar LIBOR rate: 0.69%rate: 0.69%

▪ 15% required cash payment: banks may finance15% required cash payment: banks may finance

▪ Guarantee available in major foreign currenciesGuarantee available in major foreign currencies

Example: GT SolarExample: GT Solar

GT Solar, Inc. of Merrimack NH manufactures solar module production lines (gtsolar.com).

Ex-Im Bank’s provided a 100% medium-term loan guarantee to London Forfaiting to support a $2.25 million loan.

Maharishi Solar Technology Pvt. Ltd. of New Delhi was the buyer.

Example: Bio-Microbics, Inc.Example: Bio-Microbics, Inc.

Bio-Microbics Inc., of Shawnee Mission, KS, a small business, exported 10 of its FAST wastewater treatment systems and related equipment to Mexico (biomicrobics.com).

The company benefits from a 10-year, $824,000 Ex-Im Bank 100% loan guarantee.

The transaction received longer than normal repayment terms under Ex-Im Bank's Environmental Exports Program.

Direct Loan ProgramDirect Loan ProgramDirect Loan ProgramDirect Loan Program

▪ Direct LoansDirect Loans are made by Ex-Im Bank to a foreign are made by Ex-Im Bank to a foreign buyer.buyer.

▪ Current interest rate for a 10-18 year loan: ≤ 4.40%Current interest rate for a 10-18 year loan: ≤ 4.40%

▪ Ex-Im Bank requires the buyer to make a cash payment Ex-Im Bank requires the buyer to make a cash payment to the exporter equal to at least 15% of the U.S. supply to the exporter equal to at least 15% of the U.S. supply contract.contract.

▪ 15% cash payment may be borrowed from a lender, or 15% cash payment may be borrowed from a lender, or be from the buyer’s own funds.be from the buyer’s own funds.

Example: Clipper WindpowerExample: Clipper Windpower

Ex-Im Bank made a $81 million direct loan in November, 2009 to finance the export of 27 2.5-mw Clipper Windpower turbines to Mexico (clipperwind.com).

The project owner is using Clipper's Liberty turbines to power a 67.5-megawatt wind farm at La Ventosa-La Mata in Oaxaca, Mexico.

Example: Clipper WindpowerExample: Clipper Windpower

A 15-year power purchase agreement was signed with Wal-Mart de Mexico, the nations’s largest employer.

The power purchase price is CHEAPER than what Wal-Mart pays for power from the national grid!

Example: Clipper WindpowerExample: Clipper Windpower

ConclusionConclusion

Ex-Im Bank: renewable energy & environmental Ex-Im Bank: renewable energy & environmental exports are exports are TOP PRIORITYTOP PRIORITY..

Ex-Im Bank is interested in projects of Ex-Im Bank is interested in projects of ANY SIZEANY SIZE..

Ex-Im Bank supports short, medium, and long-term Ex-Im Bank supports short, medium, and long-term financing to financing to creditworthycreditworthy international customers, and international customers, and U.S. borrowers of working capital.U.S. borrowers of working capital.

We will work with you to create ‘bankable’ projectsWe will work with you to create ‘bankable’ projects

ContactsContactsContactsContacts

Rob Guthrie - Newport Beach, CArob.guthrie@exim.gov

Craig O’Connor - Washington, DCcraig.oconnor@exim.gov

Alexandra McCann - Washington, DCalexandra.mccann@exim.gov

WWW.EXIM.GOV