EXIM Board Votes To Notify Congress Of Two Potential Transactions Totaling US$450 Million

• Supporting Approximately US$1 Billion Of Existing And Future US  Exports, Jobs

By Godson Umejiego, Correspondent US

The Export-Import Bank of the United States (EXIM) Board of Directors on Tuesday, August 11 unanimously voted to notify the US Congress, pursuant to the law, of its consideration of two potential transactions that would utilize EXIM COVID-19 economic recovery measures. The potential transactions totaling US$450 million could support approximately US$1 billion in existing and future export sales from the United States Steel Corporation (US Steel), headquartered in Pittsburgh, Pennsylvania, and an estimated 1,600 American jobs as calculated by EXIM at US Steel and its suppliers in 17 states throughout the country and the District of Columbia.

In the first transaction, EXIM’s Board of Directors unanimously voted to forward for Congressional notification a 95 percent guarantee of a US$250 million working capital loan facility under EXIM’s Working Capital Guarantee Program from PNC Bank, N.A., in Pittsburgh, Pennsylvania to U. S. Steel. EXIM’s guarantee of the 11-month loan facility would allow US  Steel to monetize a portion of the value of three of its existing contracts to supply iron-ore pellets to buyers in North America and Asia. EXIM’s guarantee is needed to enable the lender to accept the risks of the foreign contracts and US Steel to fulfill the supply contracts. The potential transaction is estimated by EXIM to support an estimated 900 US jobs in Minnesota and other states.

In the second transaction, EXIM’s Board unanimously voted to forward for Congressional notification a 95 per cent guarantee of a US$200 million supply chain finance facility from LSQ Funding Group, L.C., in Orlando, Florida, and Huntington National Bank, N.A. (HNB), in Columbus, Ohio, to U.S. Steel under EXIM’s Supply Chain Finance Guarantee Program. EXIM’s guarantee of the 12-month facility would support the purchase of accounts receivable due from US Steel to 50 to 60 of its US suppliers in approximately 16 states and the District of Columbia. LSQ Funding Group would enter into receivables purchase agreements with US Steel suppliers under LSQ’s existing supply chain finance programme, and HNB would further purchase the receivables from LSQ. EXIM would guarantee payment of the receivables, thereby extending its support to US Steel and its network of suppliers across the United States.

Suppliers potentially benefiting from the Supply Chain Finance Guarantee Programme transaction are located in Alabama, California, the District of Columbia, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. The potential transaction is estimated by EXIM to support 700 US  jobs.

In addition to the Congressional comment period, the transactions are subject to mutually satisfactory negotiation of terms and conditions among US Steel and the lending banks, as well as final approval by the EXIM Board of Directors and US Steel Board of Directors.

“With today’s unanimous Board action, we are notifying Congress of EXIM’s consideration of these potential transactions. Now, more than ever, our US companies need to be competing in the global marketplace. We at EXIM were swift to focus on COVID-19 economic recovery measures, and these transactions, when approved final, will support 1,600 American jobs at a major US employer, the United States Steel Corporation, and their suppliers in states across the country,” said EXIM President and Chairman Kimberly Reed.

“This is a very inventive approach, and I applaud EXIM for helping get a major American employer and exporter through the challenges posed by COVID-19,” said US Department of Commerce Secretary Wilbur Ross, an ex officio Member of EXIM’s Board of Directors, who also participated in the virtual Board of Directors meeting. “I believe that US Steel is on its way to becoming the low-cost producer of integrated steel mills in the US This is a win-win situation.”

“The two transactions considered today will support jobs in the industrial heartland of America, and it is important, relevant, and timely for EXIM to engage in supporting these exports and associated jobs,” said EXIM Board Member Judith D. Pryor. “Maintaining a robust domestic manufacturing base is a win-win when it comes to the economy and our national security, and I’m pleased to notify Congress of these transactions.”

“The transactions that EXIM notified Congress of today will support approximately 1,600 jobs across over 50 companies in the supply chain during a time when the industry’s finances are struggling due in part to COVID-19,” said EXIM Board Member Spencer T. Bachus, III. “EXIM COVID-19 relief measures continue to support the exporting community during this time of crisis.”

In March 2020, as part of EXIM’s COVID-19 response initiatives, EXIM temporarily approved an increased guarantee coverage option to 95 per cent under its Working Capital Guarantee Programme and Supply Chain Financing Guarantee Programme, an increase from the agency’s standard 90 per cent guarantee. The guarantees utilizing the increased coverage option are not to exceed one year effective from the date of the financing.