application for long-term loan or guarantee - Export-Import Bank of ...

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OMB No. 3048-0013LONG-TERM LOAN OR GUARANTEE APPLICATIONExpires 4-30-2010ATTACHMENT F: Project and Structured FinanceI. Project Finance.The term “project finance” refers to the financing of projects that are dependent on the project cash flows for repayment as defined by thecontractual relationships within each project. These projects do not rely on the typical export credit agency security package which hasrecourse to a foreign government, financial institution or established corporation to meet a reasonable assurance of repayment criterion. Bytheir very nature, projects rely on a large number of integrated contractual arrangements for successful completion.1. Ex-Im Bank Project Finance.P Maximum Support Possible. Whereappropriate, Ex-Im Bank will offer themaximum support allowed within therules of the OECD Arrangement, toinclude:a) Financing of interest accrued duringconstruction related to the Ex-Im Bankfinancing.b) Allowance of up to 15% foreign contentin the U.S. package.c) Maximum repayment term allowed underthe OECD guidelines.P No Size Limitation. There are no minimumor maximum size limitations.P Flexible Coverage. Any combination ofeither direct loans or guarantees forcommercial bank loans with political riskonly or comprehensive coverage areavailable for a given project.P Flexible Equity Arrangements. There areP Rapid Case Processing. With the help ofno predetermined equity requirements. Ex- outside financial consultants, Ex-Im Bank willIm Bank will review and determine the give a preliminary indication of support, calledappropriate equity structure on a case-by- a Preliminary Project Letter (PPL), within 45case basis. The equity sponsor’s own days from the date evaluation begins by thenership position cannot be transferred outside consultant. Should the project bewithout Ex-Im Bank’s consent.sufficiently developed, the sponsor mayP Ex-Im Bank Exposure Feeproceed directly to a final commitment fromCommensurate with Risk. Exposure fees the PPL, as determined by the Project Financewill vary depending on the risk assessment Division.of the project and the type of coveragerequested during construction and postP Financial Consultants. Ex-Im Bank hascompletion. The exposure fee can be paidadvisers on specific project finance cases.up-front or with each disbursement and canPlease contact the Structured Finance Group.be financed.P Environmental Considerations. Ex-ImBank’s environmental procedures willapply.2. Application Process.P Submission. The project finance applica-tionmust include: 1) the standard Ex-Im Bank LTApplication, and 2) five copies of thematerials listed in this attachment. Thesematerials should be marked “Project FinanceApplication” and submitted to Ex-Im Bank.P Preliminary Review. Ex-Im Bank willreview the submitted material within five toten business days of the date that theapplication is received by the StructuredFinance Division. This review willdetermine if the application includes theinformation required to proceed with anevaluation.P Incomplete Applications. If the applicationpresented is determined to be incompleteby the Structured Finance Division, theapplicant will be contacted with anexplanation of the application’s deficiencies.If the application is not determined to besuit-able for limited recourse projectfinancing but could still be considered foranother form of Ex-Im Bank financing, itwill be forwarded to the appropriate divisionand the applicant will be notified.P Choice of Financial Consultant. Afinancial consultant will be selected by Ex-Im Bank to evaluate the application.Determination of the specific financialconsultant will depend on several factorsincluding geographic and sector expertise,and ability to meet project deadlines.P Evaluation Fee. Before the financial consultant begins review, the applicantwill be required to pay an evaluation fee. P Other Fees. For most projects, Ex-ImBank will require, either in conjunctionwith other lenders or for its own use, theadvice of independent outside legalcounsel, independent engineers, andinsurance advisers. In addition, there maybe other fees associated with conductingproper due diligence. Payment for theseand any other fees will be theresponsibility of the project sponsors orthe applicant.PPPreliminary Project Letter. Assuming theevaluation process is satisfactory, the StructuredFinance Division will issue a PPL. The PPLindicates that Ex-Im Bank is prepared to moveforward on a financing offer and thecorresponding general terms and conditions.These terms and conditions will be basedupon the information available at the time ofapplication. The evaluation and issuance ofthe PPL will be completed within 45 days ofcommencement of the evaluation.Evaluation Post-PPL. After issuance of thePPL, Ex-Im Bank will work with the applicantto secure a final commitment. On a case-bycasebasis, Ex-Im Bank may continue toutilize the financial consultant.EIB Form 95-10 (attachment F)Revised 1/071
OMB No. 3048-0013LONG-TERM LOAN OR GUARANTEE APPLICATIONExpires 4-30-2010ATTACHMENT F: Project and Structured Finance3. Project Criteria and Application Information Requirements.a. General Project.(5 copies)DefinitionP Ideally the project should have long-term contractsfrom creditworthy entities for thepurchase of the project’s output and thepurchase of the project’s major project inputssuch as fuel, raw materials, and operationsand maintenance. Such con-tracts shouldextend beyond the term of the requested Ex-Im Bank financing. Where such contracts donot exist, additional equity and/or other creditsupport is expected.P The project should contain an appropriate allocation of risk to the parties best suited tomanage those risks. Sensitivity analysis should result in a sufficient debt service coverage ratioto ensure uninterrupted debt servicing for the term of the debt. P Total project cost should be comparable toprojects of similar type and size for a particularmarket.P Product unit pricing and costs should reflectmarket-based pricing.P Devaluation risk needs to be substantiallymitigated through revenues denominated inhard currencies, revenue adjustment formulasbased on changing currency relationships, orother structural mechanisms.Information required1. Summary of all aspects of the project, ascontained in an independently preparedfeasibility study and/or a detailed informationmemorandum, prepared by a qualifiedparty. The study or memorandum shouldinclude the project description, location, legal 5.status, ownership, and the background andstatus of key elements of the project structure,such as agreements, licenses, local partnerparticipation, and financing.2. Draft agreements for key elements of theproject, including supply and offtakeagreements.3. A breakdown of anticipated project coststhrough commissioning, including interestduring construction and working capitalrequirements, by major cost category andcountry of origin.4. A summary of the anticipated projectfinancing plan and security package,including: the proposed source, amount,currency and terms of the debt and equityinvestments; the sources of finance in theevent of project cost overruns; and description of 6. escrow accounts. Information on the terms, security requirements, and status of financing commitments of other lenders to the project, if applicable, should be provided. Projected annual financial statements covering the period from project develop- 7. ment through final maturity of the proposed Ex-Im Bank financing, to include balance sheet, profit and loss, source and application of funds statements, and debt service ratios. Projections should include a sensitivityanalysis for not only the expected scenario but pessimistic and optimistic cases as well. This information should also beelectronically provided with the project’s 8.financial model. The structure of the financial model should be in a format that is user friendly. Ex-Im Bank must be able to review and adjust 9. the assumptions in the model. Assumptions for the financial projections,including but not limited to the basis forsales volume and prices; operating andadministrative costs; depreciation,a mortization and tax rates; and localgovernment policy on price regulation.Market information, to include: tenyears of historical price and volumedata; present and projected capacity ofindustry; product demand forecast withassumptions; description of competitionand projected market share of the projectas compared to the shares of the competition;identity and location of customers;and marketing and distribution strategy.A description of the principal risks andbenefits of the project to the sponsors,lenders, and host government.A description of the types ofinsurance coverage to be purchased forboth the pre- and post-completionphases of the project.b. Participants. (5 Copies)DefinitionP Project sponsors, offtake purchasers,contractors, operators, and suppliers mustbe able to demonstrate the technicalmanagerial and financial capabilities toperform their respective obligations withinthe project.Information Required1. Sponsors must provide a brief history 3.description of their operations, adescription of their relevant experience insimilar projects, and three years of auditedfinancial statements, in English.2. If the sponsors are part of a joint venture orconsortium, information on all participants 4.should be provided. A shareholders’agreement should also be provided.Offtake purchasers and suppliers shouldprovide a history and description ofoperations, at least three years of auditedfinancial statements, in English, and adescription of how the project fits in theirlong-term strategic plan.Contractors and operators must provideresumes of experience with similar projectsand recent historical financial information.EIB Form 95-10 (attachment F)Revised 1/072
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