Financing Feasibility Fund I (FI3F) – a $30 mil. Global Project Development Fund announced by the Broad Street Capital Group

(New York City, NY, February 20, 2018)   For Immediate Release

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Fresh from its recent success, as the Financial Developer of the $250 million OPIC insured capital markets financing for NAEK Energoatom of Ukraine, Broad Street Capital Group has fi3f_badgeannounced today that it will establish a $30 mil. Financing Feasibility Fund I (Fi3F™) – a global project development fund to provide feasibility grants and pre-financing development funding for qualified emerging markets’ OPIC-insured infrastructure projects to be financed in the US capital markets.

The Fund will provide qualified Governments and State-owned borrowers feasibility seed funding in the amounts between $350,000 and $1 million dollars and pre-financing bridge loans in the amount of $1.25 to $2.5 million per project.

The Fi3F™ Fund will develop and seed international projects whose financing requirements fall between $150 mil. and $1 billion, and which will span the industry segments ranging from energy, airspace, transportation to agriculture, infrastructure and healthcare. The projects should be located in credit-challenged emerging market countries, which represent priority markets under OPIC’ development finance and insurance mandate. Financing terms for the projects will be between 10 and 20 years. A strong US supply nexus and willingness of the host governments  to provide sovereign guarantees for the financing, will be key considerations during the project selection stage.

Participation in the Fi3F™ will be open to qualified private and institutional  investors, with at least 51% of all the shareholders being US nationals. The management of the fund will utilize proven project development techniques and will be administered by an experienced team consisting of leading legal, insurance and financial experts, a placement agent and the financial developer. The Fund will obtain Political Risk Insurance from OPIC to protect its funds and will retain a top tier investment bank to act the the Paying Agent to administer all the payments and disbursements. Fi3F’ returns are targeted to fall in the 12-17% range annually.

Call for the first round of Financing Feasibility Proposals will commence April 25, 2018.

About the Broad Street Capital Group

Based in the heart of New York City’s Financial District, Broad Street Capital Group (www.broadstreetcap.com) is an international private merchant bank, which since 1988 has served several foreign governments, multiple state-owned companies, as well as SMEs in emerging markets. Through its member companies, the Group focuses on developing project financing in the $100 million to $1 billion range, providing political risk mitigation, export management services and cross-border market development advisory. The Firm has done business in over 35 countries, spanning the emerging markets landscape from Bangladesh to Ukraine.

The Firm works closely with all trade and development agencies of the U.S. Government and Export Credit Agencies of several European and North American countries. Since its inception, Broad Street Capital Group has been involved in multiple high-profile cross-border transactions in IT/telecom, aerospace, healthcare, energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and export management portfolio exceeds $417 million and expected to exceed $1.5 billion by November 15th, 2018.

This announcement is for informational purposes only and does not constitute an offer or solicitation to sell shares or securities in the Company or any related or associated company. Any such offer or solicitation will be made only by means of the Company’s confidential Offering Memorandum and in accordance with the terms of all applicable securities and other laws. None of the information or analyses presented are intended to form the basis for any investment decision, and no specific recommendations are intended.

For more information contact Alexander Gordin, Managing Director +1 212 705 8765 ext. 701 or via email agordin@broadstreetcap.com

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Broad Street Capital Group – part of the Project Financing team, which successfully concluded a cutting-edge, OPIC insured, $250 million capital markets transaction, to finance spent nuclear fuel facility construction in Ukraine

Washington, DC, February 15, 2018.

cropped-ukrainefi180profile_page_1.jpgYesterday, at a historic ceremony near the White House, a Ukrainian State-owned enterprise, NAEK Energoatom, and a special purpose statutory Trust, have concluded a $250 million loan transaction to finance the bulk of a new Ukrainian Centralized Spent Nuclear Fuel Storage Facility being built in the Chernobyl exclusionary zone.

The low-interest, 20-year loan, is notable for a number of important reasons:

  • It is the first time i political risk insurance provided by the Overseas Private Investment Corporation (OPIC) – a US Government agency- has been used to issue bonds in the US capital markets, in order to finance a state-owned enterprise.
  • Based on the insurance, and its merits, the project received Aa2 credit rating from Moody’s, which in turn allowed the project to benefit from significantly lower financing costs for the financing of the project.
  • The project marks unique collaboration between the US and Ukrainian governments, major US public and private companies and a state-owned enterprise.

Broad Street Capital Group proudly acted as the Financial Developer on this transaction and would like to congratulate all participants and thank the entire project team for its professionalism, dedication and perseverance.

As the Financial Developer, Broad Street Capital has provided project facilitation, assembled the financing team , developed the insurance application, and secured financial support for the project.

About the Broad Street Capital Group

Based in the heart of New York City’s financial district, Broad Street Capital Group (www.broadstreetcap.com) is an international private merchant bank, which since 1988 has served several foreign governments, multiple state-owned companies, as well as SMEs in emerging markets. Through its member companies, the Group focuses on arranging project financing in the $50-500 million range, providing political risk mitigation, export management services and cross-border market development advisory. The Group has done business in over 35 countries, spanning the emerging markets landscape from Bangladesh to Ukraine.

The Firm works closely with all trade and development agencies of the U.S. Government and Export Credit Agencies of several European and North American countries. Since its inception, Broad Street Capital Group has been involved in multiple high-profile cross-border transactions in IT/telecom, aerospace, healthcare, energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and export management portfolio exceeds $630 million.  For more information, please contact Tamara Zykova at tz@broadstreetcap.com,

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Moody’s assigns Aa2 rating to Energoatom transaction supported by OPIC political risk insurance

cropped-ukrainefi180profile_page_1.jpgWe at Broad Street Capital Group are excited and proud to be part of this historic financing. Moody’s unprecedented credit rating underscores the hugely positive effect of US Government’s credit enhancement to offer long-term, low-rate financing in emerging markets, such as Ukraine, for large infrastructure projects containing US exports.

 

Moody’s assigns Aa2 rating to Energoatom transaction supported by OPIC political risk insurance

Global Credit Research – 18 Jan 2018

London, 18 January 2018 — Moody’s Investors Service, (Moody’s) has today assigned a definitive Aa2 rating on the approximately U.S. $250,000,000 of senior secured Notes (the Notes) to be issued by Central Storage Safety Project Trust (the Issuer). The outlook on the rating is stable.

The Issuer will use the proceeds of the Notes for the purpose of funding a senior term loan facility of up to $250,000,000 (the Loan) to State Enterprise National Nuclear Energy Generating Company “Energoatom” (Energoatom or the Borrower), pursuant to a credit agreement between the Issuer and the Borrower (the Credit Agreement), and to fund related reserves. Energoatom will use the proceeds of the Loan to finance a portion of the costs of constructing the first stage of a long-term central spent nuclear fuel storage facility on dedicated land in the Chornobyl exclusionary zone, which will be completed, in part, pursuant to a supply contract with Holtec International. Under the Credit Agreement, the Borrower has an unconditional obligation to pay debt service. The Government of Ukraine (the Guarantor) has issued an irrevocable and unconditional guarantee (the Guarantee) of the Borrower’s payment obligations under the Credit Agreement.

Moody’s rating of the Notes is based solely upon its view of the credit benefit of a political risk insurance policy provided for the benefit of the Issuer by the Overseas Private Investment Corporation (OPIC), an agency of the government of the United States (Government of United States of America, Aaa stable). The insurance policy covers expropriation (limited to nonpayment of an arbitral award and denial of justice) (the OPIC Policy) in relation to the Credit Agreement and the Guarantee. The OPIC Policy insures the Issuer against nonpayment of an arbitral award by the Borrower and the Guarantor or denial of justice on the part of the Guarantor.

Commenting on the rating action, Christopher Bredholt, a Moody’s Vice President and Senior Analyst, said “The Energoatom transaction is one of a number we have seen incorporating credit enhancement from development finance institutions and multilateral development banks, as they seek to crowd-in risk averse private sector capital to support infrastructure investments in more challenging sovereign environments in emerging markets”. Mr. Bredholt continued “The underlying transaction structure, with New York law obligations and submission to arbitration, in the context of the Issuer’s available reserves, supports our view of the credit benefit of the OPIC policy”.

Energoatom is a state enterprise organized under the laws of Ukraine (Government of Ukraine, Caa2 positive), and is the largest electricity producer in the country, with nearly 15 gigawatts of nuclear capacity, contributing approximately 50% of Ukraine’s electricity.

Central Storage Safety Project Trust is a State of Delaware statutory trust formed under the Delaware Statutory Trust Act, and operates pursuant to a Trust Agreement. So long as any of the Notes remain outstanding, the Issuer will have no power to engage in any business activity, or to create, assume or incur indebtedness or other liabilities, other than in the performance of its duties and obligations as contemplated in the Trust Agreement. The Issuer is a bankruptcy-remote, limited-purpose financing trust and its activities will generally be limited to making the Loan, acquiring and owning the OPIC Policy, issuing the Notes and making payments thereon, and related activities.

RATINGS RATIONALE

The Aa2 rating on the Notes reflects as strengths: (1) the political risk insurance policy provided by OPIC; (2) the Issuer has access to liquidity adequate to cover approximately 2 years of debt service in the event of instigating a consolidated arbitration process following payment default by Energoatom and the Government of Ukraine, as well as reserves to cover legal and administrative expenses, which Moody’s considers appropriate given the deal structure and insurance claims process; (3) the project is a stated policy priority for the U.S. and Ukrainian governments, as the facility will be developed to store spent fuel from three of Ukraine’s four nuclear power plants, offering an efficient and secure process that will reduce Ukraine’s dependence on Russia; (4) the key transaction documentation is governed by New York law, the obligations of Energoatom are unconditional, corporate obligations (Issuer is not directly exposed to project-related risks), and the Government of Ukraine waives sovereign immunity in respect of the Guarantee; (5) the OPIC Policy requires a valid arbitral award against the Guarantor, but does not require the enforcement of the arbitral award in either a US or a Ukrainian court, and in Moody’s view this limits potential sources of delay to a timely recovery under the OPIC Policy; and (6) the transaction parties have contractually agreed to a resolution of disputes by a single, consolidated arbitration process to be conducted under expedited arbitration procedures of Article 30 of the International Chamber of Commerce Rules, located in New York.

The rating does, however, reflect the following challenges: (1) the OPIC policy does not provide a guarantee of payment under the Notes, and is not intended to directly or indirectly transmit an unconditional OPIC guarantee of Energoatom’s payment obligations under the Credit Agreement; (2) if the Issuer is unable to obtain a final arbitral award prior to the full depletion of its available liquidity, the Noteholders would not receive scheduled debt service; (3) there is only a limited, relatively untested track record of the International Chamber of Commerce (ICC) expedited arbitration procedures which have only applied to arbitration agreements executed since March 2017; (4) it may be difficult to prove that any efforts by Ukraine to frustrate obtainment of an arbitral award will satisfy the conditions for a valid Denial of Justice claim under the OPIC Policy.

RATING OUTLOOK

The outlook on the rating is stable.

WHAT COULD CHANGE THE RATING — UP/DOWN

Moody’s does not currently consider there is scope for an upgrade.

Moody’s could downgrade the rating on the Notes if: (1) the United States government bond rating were downgraded; (2) in Moody’s view, there is a material, detrimental change in the standing of OPIC as a U.S. government agency, or to the full faith and credit of the United States which has been pledged to secure the full payment by OPIC of its obligations under the insurance policy; or (3) Moody’s considers there is a non-negligible risk of the arbitration process either (1) taking longer than anticipated and materially eroding the Issuer’s available liquidity or (2) returning an unfavourable outcome.

The principal methodology used in this rating was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts published in May 2017. Please see the Rating Methodologies page on http://www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody’s rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider’s credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on http://www.moodys.com.
For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.
Please see http://www.moodys.com for any updates on changes to the lead rating analyst and to the Moody’s legal entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on http://www.moodys.com for additional regulatory disclosures for each credit rating.

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OPIC STATEMENT AT UKRAINE SIGNING CEREMONY FOR ENERGOATOM SPENT NUCLEAR FUEL PROJECT

Happy Holidays and all the Best in the New Year!

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We at Broad Street Capital Group are proud to have been an integral part of this amazing cutting-edge project financing. As a Financial Developer, Broad Street Capital has provided project facilitation, selection of the Placement Agent, as well as insurance application development and financial support for the project. This unique transaction provides for a 20-year! low-interest loan to Energotom to help construct a centralized spent nuclear fuel storage facility in the exclusionary zone in Chernobyl Ukraine.  The loan is funded by a US capital markets bond offering, which is insured by OPIC, rated by a major agency and guaranteed by the Government of Ukraine. Press release below describes the transaction in greater detail. For more information on this project, please write

December 21, 2017

Photo, 2 men signing documents while others look on, OPIC, Energoatom, Kyiv, Ukraine, Overseas Private Investment Corporation, Holtec, Camden, New Jersey, spent fuel storage casts, Depty Prime Minister Volodymyr Kistion, Minister of Finance Oleksandr Danyliuk, Deputy Chief of Mission George Kent, OPIC President and CEO Ray Washburne, Bank of America, Merrill Lynch, Broad Street Capital Group, credit agreement, political risk insurance

UKRAINE – Today, the government of Ukraine hosted a signing ceremony in Kyiv for the Energoatom Central Spent Nuclear Fuel Storage Facility Project, which helps move Ukraine closer to energy independence by giving Ukraine the capability to domestically store spent nuclear fuel. OPIC is providing $250 million in political risk insurance and Holtec International, based in Camden, New Jersey, is providing the spent fuel storage casts and other equipment.

The documents included the credit agreement, the sovereign guarantee, the arbitration agreement, and the foreign enterprise support agreement. Representatives from Energoatom, Bank of America/Merrill Lynch, Broad Street Capital Group, and an OPIC trustee were in attendance.

Deputy Prime Minister Volodymyr Kistion and Minister of Finance Oleksandr Danyliuk delivered remarks. The U.S. Embassy’s Deputy Chief of Mission George Kent read the following statement from OPIC President and CEO Ray W. Washburne, who was unable to attend:

Thank you all for the invitation to attend today’s signing ceremony in support of the Energoatom Central Spent Nuclear Storage Faculty. I regret that I was unable to attend this important milestone. Many of you have worked very hard to get us here today and I thank you for your commitment.

I am very proud that OPIC has been able to support such an important project here in Ukraine. When I became the head of OPIC just a few months ago, the first international trip I took was to Ukraine. I was very impressed with what I saw here. Despite some challenges facing Ukraine, we see the potential for high-impact development projects here – particularly in the energy sector.

It is a pleasure for the United States to help move Ukraine towards energy independence by providing the capability to store spent nuclear fuel in-country, thus eliminating the need to ship the spent fuel to Russia for storage.

With total project costs of $410 million, Energoatom cannot self-finance the entire project. Therefore, OPIC has committed up to $250 million in political risk insurance to support the development, construction, and commissioning of the Energoatom Central Spent Nuclear Fuel Storage Facility in Ukraine.

This storage facility will be developed to store spent fuel from three of Ukraine’s four nuclear power plants, offering an efficient and secure process. The United States-based company, Holtec International – located in Camden, New Jersey – will supply dry storage casks, transportation casks, ancillary equipment, and engineering and training to the facility over an expected five-year period.

I’d like to thank our partners at Bank of America/Merrill Lynch without whom this deal would not be possible. They will arrange for the sale of OPIC’s $250 million commitment in the U.S. capital markets in the form of fixed-rate bond securities. The proceeds will fund the 20-year loan to Energoatom. We are very pleased that Ukraine will support the OPIC-insured loan financing by issuing a sovereign guarantee for repayment of the loan.

This is the first OPIC deal structured in this fashion and we are pleased to partner on an innovatively financed project. By working together, we will help Ukraine meet its energy needs, while supporting the U.S. economy with the creation of manufacturing jobs.

Thank you.

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The Overseas Private Investment Corporation (OPIC) is a self-sustaining U.S. Government agency that helps American businesses invest in emerging markets. Established in 1971, OPIC provides businesses with the tools to manage the risks associated with foreign direct investment, fosters economic development in emerging market countries, and advances U.S. foreign policy and national security priorities. OPIC helps American businesses gain footholds in new markets, catalyzes new revenues and contributes to jobs and growth opportunities both at home and abroad. OPIC fulfills its mission by providing businesses with financing, political risk insurance, advocacy and by partnering with private equity fund managers.

OPIC services are available to new and expanding businesses planning to invest in more than 160 countries worldwide. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers. All OPIC projects must adhere to best international practices and cannot cause job loss in the United States.

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AMEX Export Import, the original Broad Street Capital Group member, announces a $20 million contract with SR Group of Bangladesh

Fi3E Badge(October 31st, 2017, New York City, NY)  AMEX Export Import, the original member of the Broad Street Capital Group, announced today that it has signed a $20 million contract to provide Supply and Export Management Services to the SR Chemical Group of Bangladesh for delivery of a 30,000 ton per year, caustic soda production facility, as well as of two more facilities for derivative product manufacturing.

Over the next eight to ten months, AMEX will work with suppliers from the US and China to oversee and manage design, production, deliveries, as well as provide trade finance services for a state-state-of-the-art chemical production facility to be constructed in Bangladesh.  International Process Plants and Equipment Corp. of Princeton Junction, NJ (www.ippe.com) has been selected as the primary equipment supplier.

“SR Chemical Group is proud to bring the latest technology in caustic soda production to Bangladesh. The new facility will create over 500 jobs and will provide significant economic impact to the area surrounding plant’s location.” stated Mr. Asif Rabbani the Group’s Chairman.  ” We are very pleased to work with AMEX and its international suppliers who were chosen based on their proven international track record, experience with plant construction, proprietary technology and competitive pricing” added Mr. Rabbani

IPPE is delighted to serve as main supply contractors for the proposed main production facility.  SR Group and AMEX will benefit from IPPE’s forty plus years of global experience supplying chemical process plants. Our company’s presence and relationships in China will allow for cost effective and timely delivery of the equipment to the end-user” said Ross Gale, Vice President of Business Development of  IPPE

“We are honored to be part of this important multi-national project” stated Alexander M. Gordin, managing director of Broad Street Capital Group and Chairman of AMEX Export Import. “While the Project is highly complex from the trade finance, project management and logistic’s perspectives, this assignment fits squarely into the Develop, Finance, Supply and Insure framework, which serves as the foundation of the Broad Street Capital Group’s mission” added Mr. Gordin

About SR Group

SR Group (www.srgroup-bd.com) is one of the biggest & leading conglomerates of Bangladesh since 1978. SR Group’s ambitious business expansion is designed and driven by a visionary yet very humble person Mr, GM Siraj. He is not only a far-sighted entrepreneur, but also known for his patriotism. His philanthropy, honesty, sincerity and dedication fetched the group to today’s lofty achievements.The history of SR Group dates back to 38 years ago when it was founded. Now, the group is running 17 units of Telecom, Transport, Logistic, Restaurant, Garment Accessories, Food Processing, FMCG, CNG Processing, Chemical, Information Technology, Mobile Finance successfully.The company’s employee strength has been steadily increasing from the start. Current employee strength is 5000+.

About AMEX Export Import  IncWP_20130620_022

Since 1988 AMEX (www.amexexim.com) has been a reliable partner in countless export-import and export management transactions in over 40 countries. Part of the Broad Street Capital Group, AMEX, as exporter of record, provides complete export finance, shipping and A/R insurance solutions.  AMEX professionals are renowned for structuring complex multi-party, multinational export management transactions.

About IPPE

International Process Plants and Equipment Corp. engages in buying and selling new, used and surplus process plants and equipment, as well as industrial real estate properties. The company focuses on buying and selling assets in the chemical, petrochemical, pharmaceutical, refining, paper, plastic, and power generation industries worldwide. It sells process plants/power plants; industrial real estate; and process equipment, including surplus, new/unused, rebuilt, re-glassed, and used/second hand equipment. The company was founded in 1976 and is based in Princeton Junction, New Jersey with operations in the United Kingdom, Czech Republic, and India.

About the Broad Street Capital Group

Based in the heart of New York City’s financial district, Broad Street Capital Group (www.broadstreetcap.com) is an international private merchant bank, which since 1988 has served several foreign governments, multiple state-owned companies, as well as SMEs in emerging markets. Through its member companies, the Group focuses on arranging project financing in the $50-500 million range, providing political risk mitigation, export management services and cross-border market development advisory. The Group has done business  in over 35 countries spanning the emerging markets landscape from Bangladesh to Ukraine.

The  firm works closely with all trade and development agencies of the U.S. Government and Export Credit Agencies of several European and North American countries. Since its inception, Broad Street Capital Group has been involved in multiple high-profile cross-border transactions in IT/telecom, aerospace, healthcare,  energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and export management portfolio exceeds $630 million.  For more information, please visit contact Rustem Tursynov at info@broadstreetcap.com,

or call + 1 929 290 0040BroadStreetCapitalGroupServices_Page_1

Nuclear waste with an OPIC wrap

  TXF PREMIUM

An Opic-wrapped Energoatom nuclear waste storage facility project bond is nearing launch. The enhanced bond will be structured around Ukrainian risk, nuclear risk, and the vagaries of the arbitration process.

A $250 million enhanced bond financing for Ukrainian nuclear operator Energoatom is likely to come to market in November this year. The bonds, for which Bank of America is placement agent, would carry breach of contract insurance from the United States’ Overseas Private Investment Corporation (Opic), and fund construction of the Energoatom Central Spent Nuclear Fuel Storage Facility near Chernobyl.

Opic is wrapping the debt in large part because a US manufacturer, Holtec International, is supplying the facility with 94 double-walled stainless steel casks and related equipment. Broad Street Capital, a New York-based advisory firm, is financial adviser and what it describes as “financial developer” for the project.

READ MORE

 

Grey2White Initiative

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(Article Reprinted by Popular Demand)

Hypothesis:

Given Ukraine’s current economic and geopolitical situation, one of the most beneficial  steps the US government, business and NGO community can take, is to encourage significant external and internal direct investment into the country’s economy.

Although the US Government has had some success in attracting and supporting American direct investment into Ukraine, those investment amounts are far from sufficient. US investors new to the Ukrainian market are wary of the country’s reputation for corruption, difficulty in doing business, threats from Russia and lack of financing options.

A second and much more viable economic development option, would be to support and enable direct investment by the successful Ukrainian business people who have amassed sufficient capital and are much more comfortable and adept in investing in their home market.

One problem with pursuing that option are high Western standards, which often preclude US government development agencies and public US investors from working with this potential class of investors.  This is due to the fact that for the last twenty-five years, practically all business people in Ukraine had to operate under a certain set of conditions widely considered “grey” and in many cases “black” in the West.

Some of these “grey” conditions are lack of financial transparency, inadequate corporate governance, use of yellow press, use of cash, as well as offshore accounts to conduct operations, bribery and use of adverse political influence.

In their attempts to succeed, some folks in Ukraine went beyond previously acceptable business norms and crossed the proverbial line even further by engaging in criminal “black” behavior – graft, extortion, corruption, tender rigging and illicit drug trade.

To date, these grey conditions have presented significant challenges for the IFIs, development agencies and regulated financial US investors. Yet, it is vital to recognize the necessity to find an acceptable solution that allows Ukraine’s economy to reap significant benefits from the anticipated increase in direct investment and low-cost, long-term financing.

It is also very important to understand that the proposed Grey2White (G2W) initiative aims to broaden and scale up very important development and capacity building work already undertaken over the last quarter century by IFIs, such as IFC and EBRD, USAID; development agencies such as OPIC and USTDA and financial investment communities. Those initial efforts, although quite effective, focused on a relatively small sample of Ukrainian companies and were undertaken during a different stage of the country’s development.

Initiative

The G2W initiative will only work with those companies and individuals, who will be able to create meaningful economic impact in Ukraine, after undergoing the conversion process.  G2W will not in any way target those convicted of the “black” behavior, as their reputation gap is un-bridgeable within the scope of the project.

Thus the question becomes, is it possible for US stakeholders to create an environment and a broad platform from which so-called “grey” Ukrainian businessmen seeking to utilize US financing, equipment, services and franchises, as part of their major investment programs, become “bankable” under Western standards? If the answer is “Yes.”This type of conversion will provide hundreds of millions, if not billions of dollars in direct economic benefit and enhanced geopolitical security to Ukraine and the US.

If the answer is “No,” these businessmen will either be forced to forgo the planned capital investments, or seek alliances with other grey, or black global actors in countries like Russia, China, Brazil, Iran, etc.

It is the fundamental belief by the creators of the proposed initiative that given a concerted effort by the US and Ukrainian stakeholders to develop and implement realistic procedures to increase corporate transparency, introduce financial standards, address any existing reputation issues head-on and provide reputable outside management and board oversight, it is possible within short to medium time-frames to bring these so called “grey” businessmen and their respective projects up to elevated western standards, mitigate investment and reputation risks and affect substantial economic growth in Ukraine.

Thus we hereby propose the following:

Select three-four financially viable projects sponsored  the “grey” Ukrainian actors and use them as a pilot to develop, refine and implement an effective conversion strategy to bring that project up to acceptable Western standards.

From the government side, we propose to involve the US Commercial Service, USTR, US Embassy, Ukrainian Embassy, Cabinet of Ministers of UA, members of the US Congress focused on UA issues, OPIC, regional Governors and local administrations in Ukraine, IFC, USTDA and the US EXIM Bank (when that Agency resumes its activities in Ukraine).

Among the NGO stakeholders we would like to see US-Ukraine Business Council (USBC), AMCHAM, Transparency International, Freedom House, Atlantic Council and US Ukraine Foundation. Additionally, reputable international law firms, audit firms, press, appropriate private individuals, corporate off-takers, financial market regulators, as well as relevant providers of US goods and services should be involved.

The framework of the proposed initiative shall be as follows:

  • Initial Sponsor/Project assessment and preliminary due diligence
  • Project selection and stakeholder awareness and involvement
  • Project G2W Team building (attys., directors, advisers, auditors, suppliers, investors etc.)
  • Full due diligence and implementation plan for the Western financial, FCPA and governance standards
  • Investor cultivation and underwriting of the financing package
  • Project development and implementation
  • Monitoring and compliance

To kick off the proposed initiative, we propose an intensive education and awareness-building campaign designed to simultaneously involve all the stakeholders.

After the initial buy-in into the initiative is secured, work will begin on developing the pilot projects.

During the pilot project phase, the G2W pilot project team will be seeking to achieve specific and tangible goals:

  • Fully assess the existing reputation risks, possible political influence issues, suitability for OPIC/IFC financing and Political Risk Insurance for the US project participants
  • Prepare a legal due diligence report by a world-class law firm
  • Recruit highly reputable and competent outside board members to the Project’s Board
  • Design a comprehensive PR/IR strategy to inform stakeholders of the project and its ongoing developments
  • Design and implement transparent financial audit, reporting and management accountability standards
  • Develop ways to tangibly measure economic effect of the pilot project
  • Continue to promote the initiative and seek to move it from the pilot project phase to full-blown implementation.

(to be continued)

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ExportBOOST Helps US Companies Double Their Exports

By: Alexander Gordin

Fi3E BadgeInternational trade is thought to have its routes in 19th century BC with Assyrian merchants. Over centuries the business of exports changed dramatically with evolution in transport modes, advent of Incoterms, standardized shipping containers and computerized customs clearance.

Yet for all the progress and record $2.3 trillion amount, exports in the US still remain a complex and not terribly efficient process. Multiple players involved in exports are still largely silo(ed). Even at large companies export related functions like international sales, legal, shipping, banking, financing and insurance often have difficulty communicating with one another. Concepts such as international payment protection mechanisms, US content policy, or US flag shipping requirements are often misunderstood. Generally business approach to managing export transactions is reactive, rather than proactive. Situation is even more difficult in small and mid-size businesses where resources are significantly more scant. A relatively small percentage of businesses export. Of those that do, a large portion exports to only one country. Expanded exports of goods and services represent amazing possibilities not only to help companies grow their profits and shareholder returns, but also to benefit our nation’s economy by creating new jobs and generating additional tax revenues. President Obama’s National Export Initiative has served as a catalyst to spur job growth and along with general economic recovery led to a resurgence of manufacturing activity. More needs to be done, and companies should focus on exports as a fundamental part of their business activities, rather than an afterthought.

The entire export ecosystem is ripe for disruption and entry into the technological age. I can envision a day in the very near future when shipping containers of foodstuffs, plane loads of licensed computer equipment, dozens of Ro Ro tractors, or construction cranes will be as simple as buying individual items on eBay or Amazon. Of course handling export transactions is infinitely more complex and requires signed multilingual contracts, letters of credit, export credit and freight insurance, licensing, quality inspections and complex shipping arrangements. Thus the disruption process that is being put in place needs to account for the nuanced complexity that characterizes exports. Step one of the transformation is already on the way.

ExportBoost™ – a  curated service guaranteed to help small and mid-size companies to at least double their present exports in 18 months – was recently unveiled

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by the Broad Street Capital Group (“BSCG”) . Specifically developed for US manufacturers and distributors with revenues of between $5 and $750 million and for providers of professional services , ExportBoost™ uses proprietary export building met

hodology and tools such as: Fi3E™ Export Indices, XPORTINSURE™, FinanceABLE™ and EZShip™ to greatly simplify export operations and mitigate international business risks.

ExportBoost™ was designed to help small and medium companies who are either experienced exporters, or just looking to start their international expansion to significantly grow their exports. ExportBoost™ service has two tiers – one where the exporter is guided by the Broad Street Capital’s professionals and implements the program internally and the second where Broad Street Capital Group implements ExportBoost™ on its client’s behalf. In either case, the clients will be offered a unique guarantee, should they follow the program and their exports do not at least double in 18 months, Broad Street Capital Group will refund all the fees paid by the clients for the ExportBoost™ service.

ExportBoost™ is part of the product portfolio being developed by the Broad Street Capital Group, and its partners. to greatly streamline and finance international trading operations. The project code named “Barbell” is scheduled to be unveiled at the Broad Street’s annual conference later this year.

From Goldsmiths to Bankers

A History of English Clearing Banks

Publisher’ Note: Today’s post contains a look at a fragment of Merchant Banking history and is brought to you courtesy of the Museum of Merchant Banking and International Trade (MoMBIT.org)

Introduction
Although banking as we know it has its roots in the seventeenth century, many of its features can be traced back to ancient times.

Before the introduction of a monetary system there were many instances of transactions involving credit in primitive communities. Early Pacific civilisations used strings of beads as a means of recording debts, even before they were a means of exchange. The Chinese dynasties are full of instances of note issues recorded back as far as 14BC under the Emperor Wu-Ti, who used a form of paper money made from stag skin.

In Greece, Babylon and the Roman Empire an extensive international trade demanded banking facilities, such as the lending of money, its exchange in foreign trade and travel, and the safe keeping of deposits. The Greek system was adopted by Egypt and also influenced Rome. The break up of the Roman Empire led to a decline in banking, and, at the same time, usury laws imposed by the Church put restraints on lending.

However, banking did not cease completely as the Lombard merchants developed banking in Venice and Genoa in the 12th century.

The Middle Ages
In medieval times an English village community had no need for ‘banking’, but for the merchants in the growing towns, trading at home and abroad, a knowledge of money became essential.

Since the Christian Church forbade the lending of money for interest, Jewish immigrants to England, who were barred from ordinary trade, living frugally and no bound by the laws of the Church, filled the need for money lenders.

Jews, like many foreigners, had come to England at the time of William the Conqueror. Saxon England had required few money lenders but the Roman and Anglican kings employed Jews to supply them with ready cash in anticipation of their revenue. The Jews became the King’s ‘sponges’ and his Exchequers, collecting his revenue and lending their own money on usury. The Jews became a hated race but survived due to their protection by the King’s troops. Many became rich, like Aron of Lincoln in the reign of King Henry II.

In 1290 to appease popular feeling the King withdrew his protection from the Jews, who were subsequently treated cruelly by their Christian neighbours and driven out of England, not to return until Stuart and Hanoverian times.

Italian influences
After the Jews were banished in the thirteenth century, a vacuum was left to be filled by Italian merchants from the great trading ports of Northern Italy. Lombard Street, which is still today the heart of London’s financial quarter, takes its name from Lombardy in Italy. Their vocabulary has left us with the words cash, debtor, creditor and ledger; the cryptic letters �.S.D. have only partly been discarded by decimalisation. Perhaps the most significant is the fact that these merchants conducted their business on benches or ‘bancos’ and it is from that work that our ‘bank’ is said to be derived.

The Italian merchants arrived at a time when England was changing from a feudal community, with virtually all its wealth in land, to a commercial society in which surplus money needed to be stored and used for profit. This happened in the sixteenth century after a long and stable government under the Tudors, which saw an age of discovery and the beginnings of colonisation; a time of expansion of trade at home and abroad. Moreover, as the Reformation spread throughout Europe, King Henry VIII, at the end of his reign in 1546, repealed the usury laws. Before this the Church disallowed the lending of money with interest; now money could be lent “upon interest according to the King’s Majesty’s Statute at 10 per cent”.

This Act was carried further by his daughter, Queen Elizabeth I, and so the foundation of the modern banking system was laid.

Englishmen of business followed the example of the Italian merchants. In particular, Sir Thomas Gresham, who as a pioneer of lending and borrowing money in the country, became the greatest of the London merchants and is now looked upon as the “Father of English Banking”. He served Henry VIII; Edward VI; Mary I and Elizabeth I and founded the Royal Exchange in Cornhill, London, as a meeting place for merchants to conduct their business.

Goldsmith to Banker
In the early days the goldsmith had exchanged foreign currency, keeping some in hand to supply travellers abroad and melting down the rest in the course of their basic trade. They had also become recognisable and reliable keepers of money and values for people without their own safe custody facilities.

This function was to become more important when, in 1640, Charles I destroyed the reputation of the Royal Mint as the best place for safe custody by seizing the gold. The Royal Mint, originally known as the “Mynte” from the Latin “moneta” meaning money, stood on Tower Hill in London and was the centre for English coinage.

Even though Charles I later repaid the money the damage had been done and the confidence lay with the goldsmiths, who paid interest and gave receipts. In 1640 Oliver Cromwell borrowed money from the goldsmiths to help his army in the Civil War, and in 1663, Charles II borrowed �1,300,000 to build a sailing fleet; this he was unable to repay and the Exchequer suspended the repayment. Anxiety naturally arose about the lender policies of the goldsmiths, since, as a side line, it was becoming a risk business, and so they were to develop ‘banks’ as separate entities from their usual business.

The new men were bankers but they were still goldsmiths. Samuel Pepys gives us some examples. In 1667 Alderman Edward Blackwell changed Dutch money for him and “discoursed with him about remitting of this �6,000 to Tangier, which he promised to do by the first post.” The goldsmiths retained their previous business in dealing with plate; as Pepys “called at Alderman Blackwell’s and there changed Mr Falconer’s state cup, that he did give us this day, for a tankard, which came to �6. 10s. 0d at 5s. 7d. an ounce, and 3s. 0d. in money, and with great content thence away to my brothers.”

Goldsmith bankers, as they were known, had developed into an efficient system of private banking in London and were to develop into the famous banking firms, of which some still exist today. Coutts & Company, now affiliated to the National Westminster Bank, dates from 1692. The firm of Duncombe and Kent at the Grasshopper in Lombard Street, is now part of Barclays (formerly Martins). Barclays itself was incorporated in 1896 by the amalgamation of twenty private banks, among which was Gosling & Sharpe, descended from the famous goldsmith shop of “Ye Three Squirrels” in Lombard Street, which flourished under Major Henry Pinckney in Cromwell’s time.

The receipts given by goldsmiths for deposits have been compared to modern day cheques. However, it would seem that their similarities, as with Bills of Exchange, was their negotiable nature. Drawn notes only became known as cheques a century later.

The cheque could be compared with a drawn note, by which a depositor addressed a letter to his goldsmith authorising the payment to his creditor of the sum owed. The creditor would then take this ‘note’ to the depositor’s goldsmith and there receive the sum in cash.  READ MORE

Trump scrambles Ex-Im Bank politics

The politics around the Export-Import Bank just got much weirder.

President Donald Trump is reaching for a compromise in the debate raging around the bank, aiming to keep the agency open while putting an outspoken, ultra-conservative opponent of the institution at the helm.

In doing so, Trump has confused the politics around the export credit agency, which had been a major boost to American manufacturers such as Boeing, GE and Caterpillar before Republicans took steps to crimp the flow of financing.

The formerly anti-Ex-Im Trump abruptly changed his tune on the bank last week when he called it “a very good thing” and announced plans to nominate two board members. That was a major step toward bringing the agency back to its full working capacity.

Then, two days later, he nominated for the chairmanship former Rep. Scott Garrett (R-N.J.), a vocal foe of the bank who has also come under fire in the past for his comments about homosexuality. That set up a political tightrope that both supporters and detractors of the agency may have trouble navigating.

Democrats who champion the agency because they say it creates jobs and promotes manufacturing are uneasy about supporting a social conservative who might try to hamstring the bank from within. Sen. Chris Van Hollen (D-Md.), a member of the Banking Committee, which will vet the nominees, said appointing Garrett as chair would put thousands of American jobs at risk.

Then there are conservative Republicans who have been critical of the bank and are now cheering Garrett’s nomination.

“For too long, the bank has been a clear example of corporate welfare run amok — benefiting special interests and foreign companies at the expense of U.S. taxpayers,” said Sen. Pat Toomey (R-Pa.), who also sits on the Banking Committee. “I am confident that Congressman Garrett will chart a new course for the bank that puts U.S taxpayers first.”

The result is a 180-degree flip-flop, where lawmakers and interest groups who had expended significant resources and political capital to rein in the bank could shift to support Trump’s nominees, while its biggest champions could be left behind.

“We’re encouraged and optimistic that [Garrett] would be able to substantively reform the Export-Import Bank, make it work better in the meantime,” said Chrissy Harbin, vice president of external relations at the conservative advocacy group Americans for Prosperity. “And then when the reauthorization comes up again … we’d encourage D.C. to have the same conversation about the possibility of letting it expire once and for all.”

Democrats on the Banking Committee have reservations about Garrett, including Sens. Heidi Heitkamp (D-N.D.), Joe Donnelly (D-Ind.) and Catherine Cortez Masto (D-Nev.).

Cortez Masto said she was pleased that Trump was committing to making the bank functional. Still, she has concerns about Garrett, “given his past opposition to Ex-Im’s mission, not to mention his divisive rhetoric toward LGBT families.”

“This Garrett nom is a Catch-22,” one Senate Democratic aide said. “We need to confirm him to have a quorum, but he could be a cancer inside the agency.”

Last November, Garrett lost a seat he had held since being elected to Congress in 2002. A key moment in the race came in 2015, when POLITICO reported that he told fellow GOP members that he wouldn’t support the National Republican Congressional Committee because it backed gay candidates.

Financial companies that had been campaign backers during his years as a senior member of the House Financial Services Committee pulled back.

Garrett later denied that he objected to gay candidates and said his problem was with support for same-sex marriage.

He lost to a well-funded Democratic challenger, Josh Gottheimer, but stayed plugged in to the emerging Trump team. While in Congress, Garrett served with Vice President Mike Pence and is said to be close with the former Indiana congressman. He also counted White House counselor Kellyanne Conway as a constituent and campaign donor. A December meeting at Trump Tower was well-publicized.

Garrett could not be reached to comment on this story.

Beyond Congress, his nomination also puts big American manufacturers in an awkward spot. They need more board members at the bank to provide a quorum that’s necessary to approve deals with more than $10 million. Yet they are unsure what changes might be in store given Garrett’s past comments and promises from senior administration officials like White House Budget Director Mick Mulvaney to put “reformers” at the helm.

For now, major users of the bank are focusing on the fact that Trump has put forward any nominees rather than worrying about who they are.

“Generally speaking, between the president’s comments and naming of two nominees, it’s really encouraging,” said Kate Bernard, a Boeing spokeswoman. Boeing, she added, has experienced the loss or delay of three satellite sales since the bank first fell victim to political crossfire in 2015, so giving the bank back its quorum to “shake loose” projects that remain in the pipeline is the most crucial step at this point.

There’s no question, however, that the Garrett nomination “raises some eyebrows in the business community” and “sends some mixed messages given his previous history in the House,” said one bank proponent who asked not to be named.

Garrett established himself as a consistent and outspoken opponent of the bank while in Congress, twice voting against its reauthorization in the past five years. In 2014, he expressed skepticism that attempts at reform would ever be successful, and he pushed hard the following year to let the charter expire.

“We have the opportunity to save capitalism from cronyism and to fulfill a promise to the American people to work for them instead of a select few with special connections in Washington,” Garrett said in May 2015.

“For the sake of the American taxpayer and the preservation of the free enterprise system, Congress should put the Export-Import Bank out of business.”

The White House noted that history of opposition toward the bank in discussing his appointment, saying Trump chose him “to both usher in reforms and prioritize small businesses.”

“Former Rep. Scott Garrett has passionately spoken out on some of the problems that the Bank’s previous activities created,” a White House spokeswoman said in an email. “He will be a key voice for reform.”

61ae8-exim-bank1The current nominees represent only a temporary fix: Garrett and former House Financial Services Chairman Spencer Bachus (R-Ala.), who Trump picked to sit on the board of directors, would both have to be approved to restore the bank to full working capacity. What’s more, they’ll provide a quorum that will only last until July 19, when acting Vice Chairman Scott Schloegel’s term expires. At that point, the bank would lack a quorum once again if no additional members have been confirmed before then.

But in the meantime, major users of the bank fear that the administration is trying to reshape the agency in a way that would hurt large companies that have traditionally benefited from it. Various administration officials have hinted at their own ideas for reform.

Mulvaney, who was a critic of the bank while a member of Congress, told CNBC last week that Trump’s nominees would make sure the bank “sticks to its knitting.” Commerce Secretary Wilbur Ross told the network in a separate interview that he wanted a reformed bank to “help small businesses more.”

Some reforms will be put into place as soon as Garrett and Bachus — or any two nominees — are confirmed and a board with at least three members votes to approve them. The bank’s 2015 charter included a slate of changes for the bank, and while a majority have been completed, a handful require a board quorum to be implemented — something the bank has lacked since its reauthorization was passed almost a year and a half ago.

Two of the outstanding requirements involve appointing a chief ethics officer and chief risk officer. A third involves the bank’s lending to small businesses and “increases the authority of staff to approve applications for up to $25 million in export financing for small business working capital and insurance products.”

But beyond that, bank observers say there is little a chairman can do on his own to change the bank’s operations.

And while he could attempt to direct export credit assistance more often to smaller businesses, “there’s not a ton of discretion,” said Peter Cohn, an analyst with Height Securities.

“So I don’t know that we’re going to see a whole lot more than window dressing on that front,” he said.

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