This is a ""
procedure that is very rare to come by.
This Offer will consider any type of project and fund it if the
client
can meet the criteria set forth. There are no restrictions as to size.
The minimum loan amount is US$150 Million (the larger the better).
The “Funding/Lending Source” can be any type of lender, i.e. Hedge
Fund, Finance Company,
Insurance Company, or other such entity. If the Lending Source is not a
nationally or internationally recognized organization, it will have to
be approved and must prove its ability to fund. The "bank" or "the
funding/lending source's bank" must be a bona fide bank listed in The
Bankers' Almanac.
It has
been our experience that if the subsequent procedures are followed
exactly in the following order, the transaction will probably be
completed with a minimum of problems or frustrations.
If the client or the banker attempts to change this proven sequence,
the entire transaction will become more complicated than necessary and
seem confusing, and in all likelihood, will not be successfully
completed.
When first approaching the client's lending bank it is essential that
the client addresses a specific sector of the bank. This is generally
referred to as; “The Private Banking Sector”, or “The Wealth Management
Sector”, the client can also ask for the “International Sector”, which
deals with bank instruments. Beware, walking through the front doors of
a commercial bank will not get the client to the right sector; usually
the sector the client is seeking is in the corporate or divisional
office of a bank.
Once the client finds the right sector and is speaking to the right
bank
officer, the client's goal is to present himself and the client's
project for proper bank approval and underwriting process. First and
foremost, the client's
lending bank is obliged to follow the rules and regulations of The
Patriot Act. The Patriot Act requires all USA banks must first know
their clients. All USA bank officials must be constantly on the lookout
for any banking transactions which appear to be an attempt to get
around the currency reporting requirements, for example, Laundry of
Funds.
1) First and foremost, the
client must absolutely go
to his bank and get himself and the project approved without relying on
the
collateral. The collateral will be provided only as an extra
security
and as additional collateral or cushion when the bank requests
it.
Remember, the bank is financing the project, not the BG or the SBLC,
therefore
the emphasis must be on the project, not the BG or the SBLC.
2) Client bank's evaluates the
project, goes through the compliance and credit
committee and finally the project is underwritten by the client's bank.
Client's bank gives full approval to fund the project, and as
additional
security requests from the client a BG/SBLC issued by a "AA" rated
Western European or North American Bank. This must be provided in
writing by
the bank to their own client, see "Approval Letter"
sample.
IMPORTANT:
- 99% of the times,
the Client tells his bank that he HAS an
instrument, whereas, he does not HAVE an
instrument, he can obtain support for his project and an instrument to
secure funds that the Bank or Private lender has conditionally
committed
to his project subject to the client being able to obtain the
instrument.
Of course, the Banker
sometimes assumes as much himself,
which is why the verbiage of the "Approval Letter"
is critical as it demonstrates that the Banker is
clear on that point.
(The instrument is 99% of
the time FIRST to either arrive or
be on Euroclear etc. but the funds have to be there as a
loan,
so that the instrument is not hypothecated).
- Until this stage,
all the KYC and due diligence need to be done by the client's
bank on their own client. This funding commitment must be gotten by the
client
using his and his project’s own strength AND his own close banking
relationship. We can not either get involved or assist the client at
this
stage.
However, if at this stage
the client needs our assistance then a fee will incur
as per the level of service requested. The fee will be determined
according to
the service required from us. The type of service and the related fee
amount
inquiry may be requested in writing from us.
3) Once the client's bank is
satisfied and the project is approved for
funding- subject to the client providing an extra security in the form
of an
acceptable collateral- then, and only then, can the transaction move
forward. The client must have a letter from his financing bank
showing the
approval to fund his project and the bank’s willingness to make
the loan
subject to receiving an additional acceptable security for the L/C,
e.g.
BG/SBLC/MTN issued by “AA” European or North American bank, see "Approval Letter"
sample.
4) Once the
client's bank has notified the client regarding the approval of the
client and the project, the client then sends us the
following:
- The
"Approval
Letter"
- Client Information Sheet
- Passport copy of the principal
- Corporate resolution
- 3 to 5 page Executive Summary of the
project including a 3-5 year financial overview, cash flow with income
and expenses and profit and loss tables, must also include the
drawdown schedule.
- Signed and notarized "Letter Of
Understanding" (LOU) (will be provided)
- FPA for 1% (will be provided)
5) Eventually,
the bank will issue two letters and send them to
our designated bank via swift MT799:
- One would
state that they stand ready to provide a line of credit against
BG/SBLC/MTN to be duly issued by at least “AA” rated bank to
be delivered to them via MT760. Furthermore this line of credit would
be forwarded
to our designated bank (in Europe or North America).
- The other
would state that the funds would be sent IMMEDIATELY, via
MT103 upon receipt, verification and authentication of the BG/SBLC/MTN.
6)
After the client's bank has executed the above mentioned 2 Letters, the
bankers will
contact one another and arrange all of the pertinent details for the
delivery of the instrument.
7)
After the collateral has been sent as agreed, and the
transfers have been honored, the transaction will have been completed
and the client's bank will be released from any further obligation.
 The
transfers
will be as follows:
For
Transactions up to $499 Million:
94% to collateral provider
The
remaining
amount is for the Lending bank's fees and interest.
For
Transactions $500 Million and up:
90% to
collateral provider
The
remaining
amount is for the Lending bank's fees and interest.
| How the project gets funded |
The
Funding Group is to fund the project on the basis of equity
participation, therefore the project will be fully funded and will have
no debt burden or any loan repayments to make, thus the project
will be free and clear from any debts from day one. A buy-out
(exit clause) may be negotiated and agreed to at the signing of the
funding and ownership contracts.
The Funding Group, through their local major handling firms of accounts
and attorneys, will remit the funds according
to an agreed to schedule with the client
until the project is completely funded.
 All terms are negotiable.
... HUMANITARIAN PROJECTS WILL HAVE
EQUITY PARTICIPATION (as commercial projects) ...
The instrument
is made out to the client's bank (or in some cases assigned to it).
The instrument would be for one (1) year, callable at maturity
The instrument is 100%
cash-backed only.
The funds are exchanged for the collateral ( )
and the Funding Group takes on the obligation of funding the project
|
