1	"Tom Burr" Tom Burr, SVP & Manager Export Finance
2
3	Financing Environmental Exports Why is financing so important to winning a sale? Buyers in emerging markets typically cannot borrower at interest rates and at loan tenors suitable for a project to be financially viable. Having to pay cash for the purchase often cannot be achieved, even for a sovereign buyer (budget issues). Some ancillary services may be financed Financing, even if not requested by the buyer, demonstrates a US exporter’s commitment to the sale Your competitors may be providing financing Extended financing terms not only make a project viable but could lead to a larger order!
4	Financing Environmental Exports What is the exporter’s role in the financing? The exporter is not a party to the loan agreement The exporter’s role is to be the exporter The lender is a commercial bank (CNB) The borrower is the emerging market customer of the US exporter. There is no balance sheet impact for the exporter Lender has no recourse to the US exporter Exporter’s exposure is contractual with the emerging market buyer.
5	Financing Environmental Exports What is the transaction flow? The Lender gets approval from Ex-Im Bank Lender typically issues an LC to the exporter. This is the funding instrument. As the exporter ships, they are paid by the bank As the exporter gets paid, the loan is thereby disbursed to the borrower. Borrower pays Lender payments as due
6
7	Financing Environmental Exports - Korea Transaction Summary Environmental goods sold to a private sector buyer in Korea to build 1MW solar power project. The U.S. contract amount is $7,061,000 Assume the U.S. content of the equipment is at least 85% and will be shipped from the United States. Completion time for the project is 6 months There is $1.1 million (15% of the U.S. contract amount) in local costs in the US export contract involved with the project.
8
9	Financing Environmental Exports - Korea Standard Amounts Eligible for Ex-Im Bank Support For this environmental project loan to a private sector borrower in Korea the following may be financed in the Ex-Im Bank guaranteed loan: 85% of the $7.4 million US Contract Amount 100% of the Ex-Im Bank Exposure Fee 85% of the Ancillary Services 100% of the Interest During Construction Up to 15% of the Local Cost of the US Contract Begin repayment 6 months following project completion
10	Financing Environmental Exports - Korea Standard Amounts Eligible for Ex-Im Bank Support For the $7.4 million environmental project loan the following are the eligible financed amounts: $6,769,478 US Content Amount 291,522 Eligible Foreign Content $7,061,000 US Contract Amount 355,500 Ancillary Services $7,416,500 Net Contract Price - 1,112,475 Less: 15% Downpayment 1,112,475 Plus: Eligible Local Costs 154,164 Estimated Capitalized Interest $7,570,664 202,136 Ex-Im Bank Exposure Fee $7,772,800 Total Financed Amount
11	Financing Environmental Exports - Korea The environmental loan can obtain all-in financing at 6.0% floating per annum for the 15 year loan: 6-Month LIBOR Rate: 5.44% Interest Rate Spread: 0.50% Arrangement Fee: 0.04% Legal Expense 0.00% Exposure Fee: 0.02%* All-In Cost: 6.00% p.a Annualized based on a 16.5 year repayment Exposure Fee of 4.34% * Equates to US Prime Rate – 2.25% for the promissory note and US Prime Rate – 2.31 “all-in”. As of 11/07/06 Prime Rate = 8.25% Note: Fixed Rate Loan Options are available
12	Financing Environmental Exports Need More Information? Export Finance, International Department City National Bank 555 S. Flower Street, Twenty-fourth Floor Los Angeles, CA 90071 Thomas J. Burr – SVP & Manager Phone 213.673.8612 Fax 213.673.9850 Thomas.Burr@cnb.com