Approve Financing of Northrop Grumman Sale to Georgia
FOR IMMEDIATE RELEASE July 17, 1997
Marianna Ohe 202-565-3200
The Export-Import Bank of the United States (Ex-Im Bank) and Georgia today signed a Project Incentive Agreement (PIA) laying the foundation for financing of U.S. exports to the former Soviet republic. Ex-Im Bank also agreed to finance the $15.6 million sale by Northrop Grumman Corp., Baltimore, MD of an air traffic control system to Georgia. This first transaction under the PIA will support U.S. jobs at Northrop Grumman and its subsuppliers in Massachusetts, New York and Texas. It is Ex-Im Bank`s first transaction in Georgia.
The PIA was signed at a ceremony at Ex-Im Bank headquarters attended by Georgia President Eduard Shevardnadze. Signing for Georgia were Mikheil Chkuaseli, Minister of Finance, and Tedo Japaridze, Ambassador of Georgia in the United States. Chairman James A. Harmon signed for Ex-Im Bank.
More and more American businesses are showing interest in the Caucasus region, and Georgia in particular as a transit route and for its natural resources, Shevardnadz said at the signing. These agreements will be a guarantee that they will enjoy freedom of activity in these areas and a true partnership between our two countries.
This agreement and the Northrop Grumman sale are breakthroughs for both countries, Harmon said. By facilitating creditworthy projects, the agreement enables Georgia to obtain capital goods to develop infrastructure and industry, and opens the door to an emerging market with major potential for U.S. exporters.
The PIA provides a framework for financing U.S. sales to Georgia in which repayment is based on export revenues from the project, or related projects, rather than a sovereign guarantee of the debt by the host country government. Repayment of loans will be facilitated through the establishment of offshore collateral accounts.
Also at the ceremony, Ex-Im Bank and Georgia signed a Memorandum of Understanding to enter into a credit agreement to finance the Northrop Grumman sale. Northrop Grumman and Georgia signed an official commercial contract.
Harmon hailed the innovative financing arrangements of the Northrop Grumman transaction. An Ex-Im Bank-guaranteed loan by Citicorp, New York, NY, will be repaid from revenues Georgia receives from international aircraft crossing its air space. The revenues will be deposited in an account with the International Air Transport Association in Switzerland, from which repayments will be made.
James S. Cox, Director, Project and Trade Finance, Northrop Grumman, said: Northrop Grumman is particularly pleased to see our joint efforts with Ex-Im Bank culminate in the opportunity to provide this state-of-the-art country-wide air traffic control system to Georgia. We are delighted to be involved in a transaction that will help sustain high quality U.S. jobs.
Northrop Grumman will provide Georgia with radars, an airspace management system that provides radar and flight data processing, microwave communications, generators and uninterruptable power supplies. The sale will help sustain jobs not only at Northrop Grumman but also at manufacturing facilities of subsuppliers: Digital Equipment Corp., Maynard, MA; Telephonics Corp., Long Island, NY; Alcatel Systems International, Richardson, TX, and Intelect Inc., Richardson, TX. The export follows a feasibility study funded jointly by the U.S. Trade and Development Agency and Northrop Grumman.
Ex--Im Bank has not opened its programs for sovereign-guaranteed transactions in Georgia since the country became independent following the dissolution of the Soviet Union. However, Georgia`s progress in implementing economic reforms has helped pave the way for the PIA signing between Ex-Im Bank and Georgia.
Ex-Im Bank is an independent government agency that promotes and finances the sale of U.S. goods and services around the world.