Terms and Conditions
EFIC lends money to overseas buyers to fund their purchase of Australian capital goods and services through our Direct Loan facility. Typically, EFIC advances the funds directly to the Australian exporter on behalf of the buyer, and these funds are repaid over an agreed timeframe at an agreed interest rate.
EFIC’s Direct Loan facility could assist you if your project or contract involves: - the export of capital goods or services originating from Australia;
- a minimum contract value of $5 million, (a contract value of under $5 million will require a bank guarantee from a bank acceptable to EFIC); and
- where financing will provide you with a competitive edge or is a requirement of the contract, or where competing tenders may be supported by financing proposals.
Lender Export Finance and Insurance Corporation (EFIC). Exporter Any Australian company undertaking a Contract for the supply of capital goods or services. Buyer The party contracting to buy the capital goods or services. It may be a private or public company, a department of a foreign government or a state-owned company. Borrower The Buyer also may be the Borrower. Alternately, the Borrower may be a parent or holding company, a bank acting on behalf of the Buyer, or the Ministry of Finance acting on behalf of a government department. Security EFIC determines its security requirements on the merits of each transaction. For a loan to a Ministry of Finance, there is no security required. For a bank secured loan, EFIC may require additional security if the Loan Value exceeds the bank’s guarantee. For private or public companies, security may include an indemnity given by an acceptable guarantor or bank, or other tangible security in a form acceptable to EFIC. EFIC seeks security that ranks equally with other loans advanced to the Borrower. Contract EFIC’s Direct Loan facility supports contracts involving the export of Australian capital goods and services. Capital goods are machinery and equipment of high unit values, but low unit value supplies may also qualify for EFIC’s support in the context of a larger project. Services include, but are not limited to, project management, design, commissioning and advisory services provided by Australians.
Contract Value This is the value of the Contract between the Exporter and the Buyer. While EFIC has supported contracts and projects ranging in value from $1 million to $300 million, the average value is closer to $10 million. Smaller value contracts usually require bank security to minimise the cost of putting a facility in place.
Eligible Contract Value The “Eligible Contract Value” represents EFIC’s estimate of the qualified Australian and foreign-sourced content in the Contract. Typically, EFIC looks to see at least a 60% level of Australian content in an eligible Contract.
Loan Value Under guidelines established by the OECD, EFIC may finance up to 85% of the Eligible Contract Value, plus an additional amount towards the local costs incurred in the destination country in implementing the Contract.
Under an EFIC loan, EFIC advances the funds directly to the Exporter in accordance with the commercial milestones in the Contract and with the approval of the Buyer. If the Buyer has already paid the Exporter, EFIC will reimburse the Buyer for those amounts.
Cash Payment The Exporter must receive a direct payment of 15% of the Eligible Contract Value prior to the first advance under a loan. The cash payment is not eligible for EFIC finance.
Loan Currency All major international currencies. Drawdown Period The availability of advances under the loan facility is matched to the term of the Commercial Contract. Interest Rate At the Borrower’s option, EFIC may provide either a: - fixed interest rate equal to the prevailing Commercial Interest Reference Rate (CIRR) set by the OECD at the time EFIC issues an Offer of finance; or
- floating interest rate, for example the prevailing six month London Interbank Offered Rate (LIBOR) for US dollars, with a once only option to switch to the CIRR prevailing at the time of the switch. No additional fee is charged for this option.
The actual interest rate for any loan would be subject to the rates prevailing at the time of issue of any Offer of finance and, in the case of the floating interest rate, would be reset semi-annually.
Interest Payments Interest is payable semi-annually in arrears on loan balances outstanding, commencing within six months of the first drawdown of loan funds.
Loan Repayment Repayment of principal will be in a set number of equal and consecutive semi-annual instalments typically commencing within six months from the end of the Drawdown Period. EFIC may consider repayment terms out to 10 years from the end of the Drawdown Period. After completion of the Drawdown Period, semi-annual instalments of loan principal would be synchronised with interest payments.
Fees and Charges Finance Fee This fee compensates EFIC for the risks in extending the loan and is determined by various factors, including the amount of EFIC’s exposure and the proposed terms. The fee is payable by the date of the first disbursement under any loan, either by the Buyer or by the Exporter. The Finance Fee may be included in the value of the Contract to be supported by EFIC. The Buyer may then use the loan to finance the fee.
Establishment Fee A once only fee, calculated on the Loan Value, would be payable by the Borrower upon signing of the credit agreement. Commitment Fee Calculated at an annual rate and payable by the Borrower semi-annually in arrears during the Drawdown Period, on the undrawn balance of loan funds. Payments would be synchronised with interest payments. Travel Costs If it is necessary for EFIC’s staff to travel in order to finalise any documents associated with the transaction or to assess the proposition, the Exporter or the Borrower would be required to meet the actual cost. Legal Fees All legal fees are recoverable from the Borrower or the Exporter, including the charges of EFIC’s lawyers (both internal and external on an indemnity basis) in relation to any loan.
Other Any stamp duty, or other charges, duties or taxes payable in relation to the transaction including, but not limited to, any withholding tax and goods and services tax payable in relation to the credit agreement or related loan documentation and all payments in connection with the loan. If withholding tax were payable, the Borrower would be obliged to pay the additional amounts necessary to ensure that EFIC receives payment in full of amounts due.
Documentation Documentation required for any loan would include: A credit agreement between EFIC and the Borrower which would contain terms EFIC considers appropriate to the Contract and to the Borrower; An Export Contract between the Exporter and the Buyer, in form and substance acceptable to EFIC; An Exporter’s deed between EFIC and the Exporter; and Any security documents required supporting the terms in any Offer letter. DISCLAIMER This document is provided to give you an indication of the terms and conditions upon which EFIC may be willing to provide finance. In connection with a particular transaction, EFIC reserves the right to make any changes or additions to the final terms and conditions that it believes are necessary or desirable. All requests for guarantees are considered on a case by case basis.
|
