What you will learn here
|> The types of cases the Structured Finance Division of Exim will handle;
|> The difference between “project” and “structured” finance;
|> The basic principles of a limited recourse structure;
|> How long it will take Exim to process your PF application;
|> The services Cassona USA and its retained professional services (lawyer) will provide.
The Structured Finance
|> The Exim Structured finance Division handle transactions that are:
- Corporate credit loan for over $10 million *(no bank or sovereign guarantee)
- Structured Finance
- Limited recourse Project Finance
Structured & Project Finance: What is the difference?
Structured Finance
|> Existing company borrower financing an operation expansion
|> Full recourse on the borrower (Analyze historical & projected cash flows)
|> Limited “perfection of security”
|> Can finance 85% of project costs (subject to U.S. content rule)
Project Finance
|> SPV borrower financing a greenfield project or expansion
|> Limited recourse to the Parent companies
|> Analyze project’s future cash flows
|> Complex documentation to perfect security
|> More than 15% equity required, so total debt provided less than 85%
Terms (OECD guided)
Structured Finance
|> Pay interest during construction (IDC)
|> Maximum repayment term : 10 years in general
|> Flexible amortization in some cases limited by WAL of 5 to 6.25 years
|> Financing local expenditure connected to export contract, ancillary fees
Project Finance
|> Capitalize IDC
|> Maximum repayment term 14 years in general
|> Flexible amortization limited by WAL of 7.25 years
|> Financing up to 30% local expenditure and U.S. contract value and ancillary fees
Top questions to ask yourself to determine qualification for PF
|> What is the export (from U.S.)?
|> Is the transaction CLS compliant? (based on the borrower for structured transactions and the offtaker for limited recourse deals)
|> What structure are you proposing?
|> If yours is a limited recourse transaction:
- Who are the sponsors?
- How much equity is provided?
- Is the offtaker creditworthy?
- Who is your financial advisor?
Project Finance Process: Phase I
Project Finance Process: Phase II
Our role & Transaction steps
|> Project Finance transactions involves a high degree of legal work handled by our legal team at Chigbu & Co, LLP.
|> We will submit a request for a Letter of Interest from Exim on behalf of the Sponsors and represent the Sponsors before Exim;
|> Once Exim expresses an interest in financing the project (evidenced by a Letter of Interest (LI) showing project financing terms), we will begin due diligence (including visiting project site) to determine eligibility and assist the sponsors in qualification for the financing;
|> We will provide the sponsors with a list of required information only after we have established the bona fide of the project (the list will include feasibility study, off-taker agreement, EPC agreement, business plan etc)
Our role & Transaction steps contd.
|> We will contact the identified US based EPC;
|> Determine credit-worthiness of the Offtaker and submit completed application;
|> Once Application submitted, we will work with sponsors and local counsel to ensure the transaction comply with the local laws. This will include perfection of security interest of the Export Import Bank of the United States in the jurisdiction of the project or another country where SPV is formed;
|> We will also work with the deal counsel and financial advisors and accountants Exim retains to evaluate the application and the information submitted;
|> At all times, our role will be to make sure the project sponsors eligible by providing guidance on the requirements during the process.