Us economic outlook micky levy, chief economist - bank of america 25 januar...
Structured trade finance ex im working capital guarantee programme - eugene nagatko, bank of america - 25 january 2012
1. Export-Import Bank
Working Capital Guarantee Program
Structured Trade Finance
Global Trade & Supply Chain Solutions
Eugene Nagotko
Director
Office: (201) 251-5075
Cell: (201) 403-3427
Gene.Nagotko@BAML.com
2. Ex-Im Bank Working Capital Guarantee Program Overview
Definition
– Working Capital (AR/Inventory) financing for exporters backed by the guarantee of the Export-Import Bank of the
United States, an agency that carries the full faith and credit backing of our government
Purpose
– To support financing of export of U.S. goods and services to international markets and maintain and expand U.S.
jobs
• Insures lenders from losses on foreign receivables
• Offers superior advance rates against working capital to exporters (up to 90% on A/R and 75% on inventory)
Program
– BofAML finds appropriate clients/prospects, proposes the solution, and performs standard due diligence
– BofAML has Super level Delegated Authority status ($10mm) and is an approved Fast Track lender ($25mm)
– WCGP facilities are frequently paired with domestic facilities for comprehensive trade financing solutions.
• Enables leveraging of customer service and compliance
• Cross-collateralized and cross-defaulted with domestic facilities, shared financial covenants
– Performance Stand-by Letters of Credit issued under the WCGP only require 25% Borrowing Base collateral
support
Pricing
– 1.0% to 1.5% upfront fees per annum with LIBOR plus matrix pricing spreads
– BofAML risk policy provides strategic pricing of WCGP facilities due to the Ex-Im Bank guarantee
3. Benefits of Ex-Im Bank WCGP Financing
Advantages to Borrower Bank of America Merrill Lynch Advantages
Superior advance rates vs. non-guaranteed LOC: Delegated Lending Authority provides flexibility
90% for eligible US export-related foreign A/R Up to $25 million without special approval
70% Overseas export-related foreign A/R Opportunity to lend against challenging circumstances
75% for eligible US export-related inventory Difficult asset classes
60% Overseas export-related inventory Concentrated customer bases
Raw Materials & Work-In-Process included Lumpy cash flows due to project type transactions
Concentration Risk is not a limitation with Ex-Im Bank
Well rounded sales and support structure adds to ease of use.
Enables exporter to offer longer and more flexible sales terms to buyers: Dedicated sales team provides superior product origination
support to our client borrowers
Up to 180 days from date of invoice, plus
Well established System of Record, maintained by an operations
60 days past due for open A/R team with WCGP product-specific knowledge
90 days past due if covered by credit insurance BofAML employs external counsel with extensive WCGP
product expertise
Broadens ability to finance export growth
Alternative structures are available under the WCG Program to
support various business models
Indirect exports qualify (i.e. a direct contract with the foreign
end-user is not required)
BofAML Lines of Credit shorten the time line for daily funding
needs for most clients
4. Ex-Im Bank WCGP Financing: Basic Eligibility Criteria
Client Profile:
• U.S. exporters: manufacturers and services related companies
• U.S. companies and U.S. subsidiaries of foreign companies are eligible
• Industry sectors – chemicals, transportation, alternative fuels, electrical/testing, oil & gas
• BofAML is a market leader with a global network and treasury platform
Borrower characteristics:
• Positive TNW and one year operating history
• Demonstrated experience in delivering similar contracts successfully
• Eligible collateral consists of export related A/R and inventory
• Goods and/or services must include more than 50% U.S. content
• Goods and/or services must be exported from the U.S.
• Perfected first security interest in the collateral must be available
Credit underwriting considerations:
• The usual standards are applied under our delegated authority.
• In addition, an RMA ratio qualification test is applied:
• Borrower must exceed 4 of 7 ratios as reported by the RMA for the lower quartile of
the borrower’s NAICS classification.
5. Global Trade & Supply Chain Solutions
A leader in the $2.5 Billion Ex-Im Bank Working Capital Guarantee Program
Helping clients maximize cash flow through liquidity enhancements, foreign risk
mitigation and expansion into new developing markets.
Competitive Positioning Demonstrated Market Leadership
Leader in North American export trade finance market with client Best Trade Bank In North America - 2010
base in the US Middle Market and Business Banking - Trade & Forfaiting Review - Readers' Poll
Top ranked market share in the Ex-Im Bank Working Capital
Guarantee Program Best Financial Supply Chain, North America 2008, 2009, 2010
- Treasury Management International
15 new clients in past year with ABL infrastructure and systems to
support future growth
Best Trade Finance Provider in the USA - 2011
Highest Ex-Im Bank lending authority allowing export working - Euromoney Trade Finance Poll 2011
capital loans of up to $25MM per borrower with 90% guarantee
BofAML / Ex-Im Working Capital Guarantee Program sample transactions (names / logos omitted)
Georgia based North Carolina Louisiana based New Jersey based Michigan based
renewable fuel based manufacturer producer of specialty provider of electric architecture and
producer of extrusion and chemicals supplies to energy and engineering
sheet stretch forming other industries organization
machines $12MM Term Loan
$4MM Ex-Im $5MM Term Loan $10MM Revolver $4MM Revolver
$3MM Ex-Im $17MM Revolver $25MM Ex-Im $7MM Ex-Im
$6MM Ex-Im
Proprietary & Confidential - For internal use only
6. Ex-Im Working Capital Deal Process Overview
No. Description
1 Evaluate the Need:
Review operating and export history; Product - its nature, US content, and
countries of export; Ownership evaluation; and RMA ratio qualification
2 Assess Program Suitability:
Waiver need evaluation, Formal Risk Approval, Term Sheet construction and
acceptance
3 Perform Due Diligence:
Field Exam, Legal documentation process
4 On-board and Acclimate the Client:
Orientation with borrowing procedures, Stucky (ABL system of record) utilization
and functionality, Treasury account establishment, as applicable
5 Close the Deal:
Formal closing (signing) of loan documents, Fee payment, Notification to Ex-Im
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8. Ex-Im Qualifying Ratios (as defined by the Risk Management Association):
Current Ratio Prospective
borrower ratios
are compared to
Net Sales/Total Assets NAICS industry
data as published
Debt to Tangible Worth from time to time
in the RMA
Statement Studies
Debt to Service Coverage
EBIT/Interest
Cost of Sales/Inventory Turn (days)
Sales/Accounts Receivable Turn (days)
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9. BofAML contacts for the Ex-Im Bank WCGP- Southeast MM
Product Partner- Exim Bank WCGP Trade Sales Officer
Eugene S. Nagotko Julia Reynolds
Director Director
Bank of America Merrill Lynch Bank of America Plaza
208 Harristown Road 414 Union Street
Glen Rock, NJ 07452 Nashville, TN 37219-1697
Mail code: NJ6-503-03-11 Mail code: TN1-100-06-25
Office 201.251.5075 Office 615.749.3455
Cell 201.403.3427
gene.nagotko@baml.com Julia.reynolds@baml.com
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10. This presentation is for informational purposes only. It does not constitute an offer or commitment to buy or sell or a solicitation of an offer to buy or sell a security or
any financial instrument, or a commitment to enter into a transaction, of the type generally described herein. The information contained herein, and any other
communications or information provided by Bank of America, is not intended to be, and shall not be regarded or construed as, a recommendation for transactions or
tax or investment advice, and Bank of America shall not be relied upon for the same without a specific, written agreement between us.
Information contained in this presentation has been obtained from sources believed to be reliable, but its accuracy or completeness is not guaranteed by Bank of
America. Also, certain information contained in this presentation speaks as of the date of this presentation (or another date, if so noted) and is subject to change
without notice.
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