EXIM Board Votes to Notify Congress of Two Potential Transactions Totaling $450 Million Supporting Approximately $1 Billion of Existing and Future U.S. Exports and an Estimated 1,600 American Jobs
WASHINGTON - The Export-Import Bank of the United States (EXIM) Board of Directors on Tuesday, August 11 unanimously voted to notify the U.S. Congress, pursuant to the law, of its consideration of two potential transactions that would utilize EXIM COVID-19 economic recovery measures. The potential transactions totaling $450 million could support approximately $1 billion in existing and future export sales from the United States Steel Corporation (U. S. Steel), headquartered in Pittsburgh, Pennsylvania, and an estimated 1,600 American jobs as calculated by EXIM at U. S. Steel and its suppliers in 17 states throughout the country and the District of Columbia.
In the first transaction, EXIM's Board of Directors unanimously voted to forward for Congressional notification a 95 percent guarantee of a $250 million working capital loan facility under EXIM's Working Capital Guarantee Program from PNC Bank, N.A., in Pittsburgh, Pennsylvania to U. S. Steel. EXIM's guarantee of the 11-month loan facility would allow U. S. Steel to monetize a portion of the value of three of its existing contracts to supply iron-ore pellets to buyers in North America and Asia. EXIM's guarantee is needed to enable the lender to accept the risks of the foreign contracts and U. S. Steel to fulfill the supply contracts. The potential transaction is estimated by EXIM to support an estimated 900 U.S. jobs in Minnesota and other states.
In the second transaction, EXIM's Board unanimously voted to forward for Congressional notification a 95 percent guarantee of a $200 million supply chain finance facility from LSQ Funding Group, L.C., in Orlando, Florida, and Huntington National Bank, N.A. (HNB), in Columbus, Ohio, to U.S. Steel under EXIM's Supply Chain Finance Guarantee Program. EXIM's guarantee of the 12-month facility would support the purchase of accounts receivable due from U.S. Steel to 50 to 60 of its U.S. suppliers in approximately 16 states and the District of Columbia. LSQ Funding Group would enter into receivables purchase agreements with U.S. Steel suppliers under LSQ's existing supply chain finance program, and HNB would further purchase the receivables from LSQ. EXIM would guarantee payment of the receivables, thereby extending its support to U.S. Steel and its network of suppliers across the United States.
Suppliers potentially benefiting from the Supply Chain Finance Guarantee Program transaction are located in Alabama, California, the District of Columbia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. The potential transaction is estimated by EXIM to support 700 U.S. jobs.
In addition to the Congressional comment period, the transactions are subject to mutually satisfactory negotiation of terms and conditions among U. S. Steel and the lending banks, as well as final approval by the EXIM Board of Directors and U. S. Steel Board of Directors.
"With today's unanimous Board action, we are notifying Congress of EXIM's consideration of these potential transactions. Now, more than ever, our U.S. companies need to be competing in the global marketplace. We at EXIM were swift to focus on COVID-19 economic recovery measures, and these transactions, when approved final, will support 1,600 American jobs at a major U.S. employer, the United States Steel Corporation, and their suppliers in states across the country," said EXIM President and Chairman Kimberly Reed.
"This is a very inventive approach, and I applaud EXIM for helping get a major American employer and exporter through the challenges posed by COVID-19," said U.S. Department of Commerce Secretary Wilbur Ross, an ex officio Member of EXIM's Board of Directors, who also participated in the virtual Board of Directors meeting. "I believe that U. S. Steel is on its way to becoming the low-cost producer of integrated steel mills in the U.S. This is a win-win situation."
"The two transactions considered today will support jobs in the industrial heartland of America, and it is important, relevant, and timely for EXIM to engage in supporting these exports and associated jobs," said EXIM Board Member Judith D. Pryor. "Maintaining a robust domestic manufacturing base is a win-win when it comes to the economy and our national security, and I'm pleased to notify Congress of these transactions."
"The transactions that EXIM notified Congress of today will support approximately 1,600 jobs across over 50 companies in the supply chain during a time when the industry's finances are struggling due in part to COVID-19," said EXIM Board Member Spencer T. Bachus, III. "EXIM COVID-19 relief measures continue to support the exporting community during this time of crisis."
In March 2020, as part of EXIM's COVID-19 response initiatives, EXIM temporarily approved an increased guarantee coverage option to 95 percent under its Working Capital Guarantee Program and Supply Chain Financing Guarantee Program, an increase from the agency's standard 90 percent guarantee. The guarantees utilizing the increased coverage option are not to exceed one year effective from the date of the financing.
EXIM is an independent federal agency that promotes and supports American jobs by providing competitive and necessary export credit to support sales of U.S. goods and services to international buyers. A robust EXIM can level the global playing field for U.S. exporters when they compete against foreign companies that receive support from their governments. EXIM also contributes to U.S. economic growth by helping to create and sustain hundreds of thousands of jobs in exporting businesses and their supply chains across the United States. In recent years, approximately 90 percent of the total number of the agency's authorizations has directly supported small businesses. Since 1992, EXIM has generated more than $9 billion for the U.S. Treasury for repayment of U.S. debt.
For more information about EXIM, please visit www.exim.gov.