EIB 95-10 Application for Long-Term Loan or Guarantee, Attachment

LONG-TERM LOAN OR GUARANTEE APPLICATION
ATTACHMENT F: Project and Structured Finance

I.

OMB No. 3048-0013
Expires 1/31/2005

Project Finance.
The term “project finance” refers to the financing of projects that are dependent on the project cash flows for repayment as defined by the
contractual relationships within each project. These projects do not rely on the typical export credit agency security package which has
recourse to a foreign government, financial institution or established corporation to meet a reasonable assurance of repayment criterion. By
their very nature, projects rely on a large number of integrated contractual arrangements for successful completion.

1.

Ex-Im Bank Project Finance.

P Maximum Support Possible. Where

appropriate, Ex-Im Bank will offer the
maximum support allowed within the
rules of the OECD Arrangement, to
include:
a) Financing of interest accrued during
construction related to the Ex-Im Bank
financing.
b) Allowance of up to 15% foreign content
in the U.S. package.

P Flexible Equity Arrangements. There are
P Rapid Case Processing. With the help of

no predetermined equity requirements. ExIm Bank will review and determine the
appropriate equity structure on a case-bycase basis. The equity sponsor’s ownnership position cannot be transferred
without Ex-Im Bank’s consent.
P Ex-Im Bank Exposure Fee
Commensurate with Risk. Exposure fees
will vary depending on the risk assessment
of the project and the type of coverage
requested during construction and post P
c) Maximum repayment term allowed under
completion. The exposure fee can be paid
the OECD guidelines.
up-front or with each disbursement and can
P No Size Limitation. There are no minibe financed.
mum or maximum size limitations.
P Flexible Coverage. Any combination of P Environmental Considerations. Ex-Im
Bank’s environmental procedures will
either direct loans or guarantees for
apply.
commercial bank loans with political risk
only or comprehensive coverage are
available for a given project.

outside financial consultants, Ex-Im Bank will
give a preliminary indication of support, called
a Preliminary Project Letter (PPL), within 45
days from the date evaluation begins by the
outside consultant. Should the project be
sufficiently developed, the sponsor may
proceed directly to a final commitment from
the PPL, as determined by the Project Finance
Division.
Financial Consultants. Ex-Im Bank has
advisers on specific project finance cases.
Please contact the Structured Finance Group.

2. Application Process.

P Submission. The project finance applica-tion

must include: 1) the standard Ex-Im Bank LT
Application, and 2) five copies of the
materials listed in this attachment. These
materials should be marked “Project Finance
Application” and submitted to Ex-Im Bank.
P Preliminary Review. Ex-Im Bank will
review the submitted material within five to
ten business days of the date that the
application is received by the Structured
Finance Division. This review will
determine if the application includes the
information required to proceed with an
evaluation.
P Incomplete Applications. If the application presented is determined to be incomplete by the Structured Finance Division, the
applicant will be contacted with an
explanation of the application’s deficiencies.
If the application is not determined to be
suit-able for limited recourse project
financing but could still be considered for
another form of Ex-Im Bank financing, it
will be forwarded to the appropriate division
and the applicant will be notified.

EIB Form 95-10 (attachment F)
Revised November 2004

P Choice of Financial Consultant. A

P

financial consultant will be selected by ExIm Bank to evaluate the application.
Determination of the specific financial
consultant will depend on several factors
including geographic and sector expertise,
and ability to meet project deadlines.
P Evaluation Fee. Before the financial
consultant begins review, the applicant
will be required to pay an evaluation fee.
P Other Fees. For most projects, Ex-Im
Bank will require, either in conjunction
P
with other lenders or for its own use, the
advice of independent outside legal
counsel, independent engineers, and
insurance advisers. In addition, there may
be other fees associated with conducting
proper due diligence. Payment for these
and any other fees will be the
responsibility of the project sponsors or
the applicant.

1

Preliminary Project Letter. Assuming the
evaluation process is satisfactory, the Structured
Finance Division will issue a PPL. The PPL
indicates that Ex-Im Bank is prepared to move
forward on a financing offer and the
corresponding general terms and conditions.
These terms and conditions will be based
upon the information available at the time of
application. The evaluation and issuance of
the PPL will be completed within 45 days of
commencement of the evaluation.
Evaluation Post-PPL. After issuance of the
PPL, Ex-Im Bank will work with the applicant
to secure a final commitment. On a case-bycase basis, Ex-Im Bank may continue to
utilize the financial consultant.

LONG-TERM LOAN OR GUARANTEE APPLICATION
ATTACHMENT F: Project and Structured Finance

OMB No. 3048-0013
Expires 1/31/2005

3. Project Criteria and Application Information Requirements.
a. General Project.(5 copies)
Definition
P Ideallythe project should have long-term contracts from creditworthy entities for the
purchase of the project’s output and the
purchase of the project’s major project inputs
such as fuel, raw materials, and operations
and maintenance. Such con-tracts should
extend beyond the term of the requested ExIm Bank financing. Where such contracts do
not exist, additional equity and/or other credit
support is expected.

P The project should contain an appropriate

P Product unit pricing and costs should reflect

allocation of risk to the parties best suited to
manage those risks. Sensitivity analysis should
result in a sufficient debt service coverage ratio
to ensure uninterrupted debt servicing for the
term of the debt.

market-based pricing.

P Devaluation risk needs to be substantially

mitigated through revenues denominated in
hard currencies, revenue adjustment formulas
based on changing currency relationships, or
other structural mechanisms.

P Total project cost should be comparable to

projects of similar type and size for a particular
market.

Information required
1. Summary of all aspects of the project, as
contained in an independently prepared
feasibility study and/or a detailed information memorandum, prepared by a qualified
party. The study or memorandum should
include the project description, location, legal
5.
status, ownership, and the background and
status of key elements of the project structure,
such as agreements, licenses, local partner
participation, and financing.
2. Draft agreements for key elements of the
project, including supply and offtake
agreements.
3. A breakdown of anticipated project costs
through commissioning, including interest
during construction and working capital
requirements, by major cost category and
country of origin.
4. A summary of the anticipated project
financing plan and security package,
including: the proposed source, amount,
currency and terms of the debt and equity
investments; the sources of finance in the

event of project cost overruns; and description of 6.
escrow accounts. Information on the terms,
security requirements, and status of financing
commitments of other lenders to the project, if
applicable, should be provided.
Projected annual financial statements
covering the period from project develop7.
ment through final maturity of the
proposed Ex-Im Bank financing, to
include balance sheet, profit and loss,
source and application of funds
statements, and debt service ratios.
Projections should include a sensitivity
analysis for not only the expected
scenario but pessimistic and optimistic
cases as well. This information should also be
8.
electronically provided with the project’s
financial model. The structure of the financial
model should be in a format that is user friendly.
Ex-Im Bank must be able to review and adjust
9.
the assumptions in the model.

Assumptions for the financial projections,
including but not limited to the basis for
sales volume and prices; operating and
administrative costs; depreciation,
a mortization and tax rates; and local
government policy on price regulation.
Market information, to include: ten
years of historical price and volume
data; present and projected capacity of
industry; product demand forecast with
assumptions; description of competition
and projected market share of the project
as compared to the shares of the competition; identity and location of customers;
and marketing and distribution strategy.
A description of the principal risks and
benefits of the project to the sponsors,
lenders, and host government.
A description of the types of
insurance coverage to be purchased for
both the pre- and post-completion
phases of the project.

b. Participants. (5 Copies)
Definition
Project sponsors, offtake purchaser,
contractors, operators, and suppliers must
be able to demonstrate the technical,
managerial and financial capabilities to
perform their respective obligations within
the project.

EIB Form 95-10 (attachment F)
Revised November 2004

Information Required
1. Sponsors must provide a brief history and
description of their operations, a
description of their relevant experience in
similar projects, and three years of audited
financial statements, in English.
2. If the sponsors are part of a joint venture or
consortium, information on all participants
should be provided. A shareholders’
agreement should also be provided.

2

3.

4.

Offtake purchasers and suppliers should
provide a history and description of
operations, at least three years of audited
financial statements, in English, and a
description of how the project fits in their
long-term strategic plan.
Contractors and operators must provide
resumes of experience with similar projects
and recent historical financial information.

OMB No. 3048-0013
Expires 11/30/2004

LONG-TERM LOAN OR GUARANTEE APPLICATION
ATTACHMENT F: Project and Structured Finance
c. Technical. (3 Copies)
P Project technology must be proven and

reliable, and licensing arrangements must
be contractually secured for a period
extending beyond the term of the Ex-Im
Bank financing.

Information Required
1. Technical description and a process flow
diagram for each project facility.
2. Detailed estimate of operating costs.

P A technical feasibility study or sufficiently

3. Arrangement for supply of raw materials
and utilities.
detailed engineering information needs to be
provided to demonstrate technical feasibility 4. Draft turnkey construction contract and
of the project.
description of sources of possible cost
increases and delays during construction,
including detailed description of liquidated
damage provisions and performance bond
requirements.

5. Project implementation schedule, showing
target dates for achieving essential project
milestones.
6. A site-specific environmental assessment,
highlighting concerns, requirements and
solutions. The information to be provided
should demonstrate compliance with Ex-Im
Bank’s environmental guidelines.

d. Host Country Legal/Regulatory Framework and Government Role. ( 5 Copies)
Definition

P Host government commitment to

proceeding with the project needs to
be demonstrated.

Information Required

1. A description of the host government’s role in
the project, and progress made toward obtaining
P Legal and regulatory analysis needs to
essential government commitments, including
demonstrate that the country conditions
authorizations from appropriate government
and the project structure are sufficient to
entities to proceed with the project.
support long-term debt exposure for the
project through enforceable contractual 2. A definition of the control, if any, that the
relationships.
government will have in the management and
operation of the project, and status of any
P Ex-Im Bank’s relationship with the host
assurances that the government will not
government will be addressed on a caseinterfere in the project’s operation. If the
by-case basis.
government is also a project sponsor, these
issues will be of particular importance.

3. Evidence of the government’s current and
historical commitment and policies for
availability and convertibility of foreign
currency.
4. Status and strategy for obtaining
government undertakings to support any
government parties involved in the project,
to the extent that such undertakings are
needed to provide adequate credit support
for such entities.

II. Structured Finance.
“Structured” transactions will have an established corporation as a borrower but may rely upon sources of collateral or security in
addition to the corporation’s balance sheet. The information required for structured finance applications is the same as that requested in
“Attachment G’ plus any additional data describing the proposed structure and security package.

If you have questions about this attachment, please contact the Project and Structured Finance Division
(Telephone: 202-565-3690 or Fax: 202-565-3695).

EIB Form 95-10 (attachment F)
Revised November 2004