EFIC provided Ferra Engineering's bank with an export working capital guarantee

When Brisbane-based Ferra Engineering Pty Ltd (Ferra) won its third subcontract to supply parts to the F-35 joint strike fighter (JSF) program, it needed additional working capital to deliver on the subcontract.

EFIC provided an A$2.7 million export working capital guarantee to Ferra’s bank, enabling it to lend this amount to Ferra to assist in financing the subcontract. Ferra, a specialist manufacturer of aerospace structures and sub-systems, had secured a contract to supply weapons bay adapters for the JSF being developed by Lockheed Martin Corporation (Lockheed). Ferra was a supplier to one of Lockheed’s key subcontractors.

Ferra’s subcontract was to manufacture, assemble and test weapons adapters, the mechanisms to hold and release the munitions carried by the JSF. Ferra is the only company worldwide approved by Lockheed to make and assemble weapons bay adapters for the JSF program.

While Ferra’s work involved substantial costs for materials and labour, under the subcontract it would not receive payment until after the parts were shipped. This meant that the company faced a working capital shortage and needed additional funding to perform the subcontract.

With support from EFIC, Ferra’s bank was willing to provide a loan for working capital to Ferra. EFIC’s export working capital guarantee gave the bank a guarantee for repayment of the loan.

‘We’ve completed similar subcontracts for the JSF project, so we’re confident of our technical ability to deliver’, said Mark Scherrer, Ferra’s Managing Director. ‘But with these large orders, maintaining cash flow throughout the subcontract can be a challenge and that’s where the assistance of EFIC and our bank has been invaluable’.

An export working capital guarantee from EFIC to an exporter’s bank guarantees repayment of amounts that the bank lends to the exporter to finance one or more export contracts.

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