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Overcoming Financial Barriers for Exporters The Role of EFIC in Financing Exports and Managing Commercial Risks. Vivianne Arnold Head of Marketing varnold@efic.gov.au www.efic.gov.au. Australia’s export credit agency (ECA) 100% owned by the Government of Australia
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Overcoming Financial Barriers for ExportersThe Role of EFIC in Financing Exports and Managing Commercial Risks Vivianne Arnold Head of Marketing varnold@efic.gov.au www.efic.gov.au
Australia’s export credit agency (ECA) • 100% owned by the Government of Australia • Operates on a commercial basis • independent board • self-sustaining (profitable) • pays dividend to Treasury • AAA rating (S&P) • Over 50 years experience • About EFIC
Overcoming Financial Barriers for Exporters • EFIC Mission
Role complementary to commercial lenders • Fills ‘market gap’ when commercial finance unavailable/insufficient • Market gap • Catalytic Role • fills gap until market is ready • ‘halo effect’ • Fluid Market Dynamics • fluctuates with level of liquidity, credit • risk cycles, etc • Australian Content • Level Playing Field - OECD • no subsidy • meet competition • Commercial & National Interest Accounts riskier countries EFIC extends market capacity commercial markets stop here (frontier fluctuates) smaller, riskier companies
GUARANTEES INSURANCE DIRECT LOANS EFIC’s finance and insurance solutions • Corporate • Project companies • Foreign government • Export finance guarantees • Bonds/guarantees: • performance, advance payment and warranty bonds; US surety bonds • documentary credit guarantees • Political risk insurance • Export payments insurance • Bond insurance TAILORED SOLUTIONS
Case study – Austal Limited, 2009 Result Austal was able to secure the sale of the ferries • Customer • Australian company which is a world leader in the design and manufacture of high-performance aluminium vessels. • Need • Austal won a $74.7m contract to provide four high-speed catamaran ferries to the Trinidad & Tobago government, who needed buyer finance in order to purchase the ferries. • Solution • ANZ provided a loan facility to the T&T government to finance its purchase of the ferries. EFIC provided an export finance guarantee to ANZ for $61.3m to guarantee repayment of the loan.
Case study – Knog, 2011 Result Knog had additional cash flow to fill its growing export orders • Customer • Melbourne-based urban cycling accessories company which exports to over 40 countries through a network of distributors. • Need • There was a delay between when Knog had to pay its suppliers and when the company received payment from distributors. The company needed additional cash flow to fulfil its distributors’ orders. • Solution • A US$600,000 export working capital guarantee from EFIC to Westpac.
Case study – Ferra Engineering, 2010 Result Ferra had cash flow to fulfill the contract • Customer • Brisbane-based specialist manufacturer of aerospace structures. • Need • Ferra secured a contract to supply a sub-system for the F-35 joint strike fighter and needed A$2.7 million in additional working capital to undertake it. The company’s bank was unable to provide these funds. • Solution • EFIC provided Ferra’s bank with a export working capital guarantee for the sum required so that the bank could provide the funds to Ferra.
Case study – Lean Field Developments, 2011 Result Lean Field was able to meet its contractual obligations • Customer • Lean Field Developments is a civil construction company that specialises in coal seam gas pipelining and services the Australian and North American resources industries. • Need • Lean Field was required to provide performance bonds to QGC Pty Limited, the project principal, in support of its contractual obligations under a pipe laying contract. The company also needed additional liquidity for existing and proposed contracts. • Solution • EFIC provided a bonding line for Lean Field to draw on as required, and also an export working capital guarantee facility to support a standby loan facility from the company’s bankers.
Case study – PNG LNG project, 2009 Result Support for Australian investment and Australian participation • Customer • A multinational consortium led by ExxonMobil to develop a Greenfield integrated liquefied natural gas project in Papua New Guinea. The project will eventually produce around 6.6m tonnes of clean LNG each year. • ASX-listed Oil Search and Santos are major investors. • Need • Project finance. • Solution • EFIC will loan US$350m to the project as part of a syndicate of ECAs and commercial lenders. • Due to EFIC’s participation, Australian companies will be selected to join a team of contractors and suppliers to construct the project.
Case study – Equinox Minerals, 2006 & 2007 Result Major mining development could proceed • Customer • A mining company listed in Australia and Canada. • Need • Project finance and political risk insurance for the development and operation of the Lumwana mine, Zambia, which will be Africa’s largest open-pit copper mine. • Solution • EFIC committed US$43 million to a US$584 million finance facility. • EFIC also led a syndicate of private insurers to provide PRI to the commercial lenders and to bank a providing the project revenue against adverse movements in the copper price.
STPF – Adding value through Export Credit Agency relationships
