Rebuilding Ukraine? All of us have it wrong!!! (some more than others)

Eleven months of constant work on the subject of Rebuilding Ukraine (both during and after the war); eleven months of preparation; of running two daily Telegram channels and reading countless articles on subject; watching videos and listening to podcasts by renowned, well-educated experts and politicians; daily conversations with friends and business associates who live in Ukraine and multiple in person and Zoom meetings with US and UA government officials, IFI representatives, mayors of over forty Ukrainian cities and dozens of corporate representatives.

Over these eleven months, a constant barrage of information and PR promotion from think tanks, government investment agencies, IFIs and reporters. Months of reading about emerging and repeating themes of using confiscated russian assets to rebuild Ukraine, countless high-level meetings with renowned global financial institutions, most of whom have never been in Ukraine before, on how to manage expected billions of dollars expected to flow to the country after the war. Endless talks about need for insurance, insurance and insurance, direct foreign investment and grants, grants and more grants. All these subjects and issues and information flows were part of our daily lives at the Rebuilding Ukraine Agency since the day of its official founding March 24th, 2022! Then, three days in Warsaw, being a key part of the REbuild Ukraine conference and exposition changed it all. Speaking and listening to hundreds of attendees (6,000 attended), tens of exhibitors (254 companies were present) and multiple representatives of the government agencies from at least dozen countries (there were over twenty in attendance) certain things became crystal clear.

Despite what the title of this article says, not all of the folks involved in the subject of Rebuilding Ukraine have it wrong, and many solutions, activities and plans offered are very good, needed and may one day have a shot at being implemented. The problem is not the plans and ideas and available insurance or financing programs. The problem is DISCORD of all the parties involved. There is a very famous 1814 fable by Krylov called Lebed’, Rak i Shuka (Swan, Crayfish and a Pike) (Yes, I know Krylov was russian and no, I will not accept criticism of activists for using this reference here, as it absolutely perfectly illustrates what is going on with respect to the subject of Rebuilding Ukraine). The gist of the fable is that when asked to pull a cart together, the swan, the crayfish and the pike would have easily succeeded had they worked together in unison, yet they failed miserably because the swan was pulling up wanting to fly, crayfish crawled backwards, and the pike was pulling the cart toward the river. With this type of effort, the cart of course remained in place.

The same situation is taking place now with respect to Ukraine. Multiple stakeholders, each with their own self-interest, are pulling the proverbial cart in different directions, while Ukraine remains in one place, all while being raped, tortured and pillaged by the aggressor. This is unacceptable and will not work effectively when the time comes to rebuild the country. Add to that graft and corruption, which exists both in Ukraine and in practically all Western countries, inexperience of many new entrants, protectionism and squatting within Ukraine and the recipe for a failure is almost complete. Below are but just a few factors, which have developed during the war, and which contribute to the discord. Rebuilding Ukraine’s process today is like a star-studded symphony orchestra without a conductor.

War effect – this terrible war has affected the lives of tens of millions of people, severely damaged Ukrainian economy and infrastructure, necessitated new skills and knowledge from multiple local participants, and completely upended the traditional means of municipal financing, affected urban development, reconfigured construction supply markets, impacted labor availability, economic development and this is just scratching the surface.

Federal vs municipal – Ukraine’s Federal Government has done a very credible job dealing with the war effort, repairing some infrastructure and planning for the post war recovery. The situation at the regional and local levels has not been quite as smooth and uniform. The fact that the local authorities were left largely to fend for themselves did not help. Most Regional and local entities do not have significant experience dealing with the western businesses and attracting international financing.

Famous vs forgotten – although there are over one thousand cities, towns, municipalities and villages, some like Bucha, Irpin, Bakhmut, Mariupol, Kharkiv, Zaporizh’e Kherson, Mykolaiv, Dnipro and Odesa became very well known as result of the devastating war and their suffering. This “fame” attracted disproportionate attention from the international community and a disproportionate desire to help rebuild these particular locales. Yet hundreds of other municipalities, some located practically next door to the aforementioned, have also suffered just as badly. What about them? How do they cope not only with the effects of war, but with being dealt a less fortunate hand in the rebuilding process?

PR effect – PR on all levels has been one of the most effective tools during this horrible war. From the national level PR of the President speaking to the parliaments, governments and international financial institutions, to more localized investment promotion agencies, municipalities, countless NGOs, YouTube bloggers and commercial entities constantly appearing in social media and at various international events, PR has made Ukraine the leading global brand and the most attractive destination for rebuilding. This phenomenon has attracted a great many players who have never before done business in Ukraine, or even visited the county.

Award of patronage – many countries, NGOS, individuals and businesses spent the last year helping Ukraine in its war efforts. Countless tons of military equipment, medical supplies, food, clothing and much more were delivered to Ukraine. As the result, the President of Ukraine awarded to some countries priority patronage over rebuilding certain cities. The basis for such awards were unclear, the countries selected were very few and this process did not appear to help the remaining municipalities in Ukraine.

Foreign entrants – It is estimated that businesses, NGOs and governments from about fifty countries are interested to participate in helping Ukraine win the war and to take place in the subsequent rebuilding process. Almost every country has one or more government agencies charged with supporting exports and investments for the businesses from that country. These agencies are very useful in helping their constituents enter multiple foreign markets but could become much more effective if they become a part of the Ukraine-focused international initiative, one that is capable of delivering to their clients the so called “last mile” connectivity with the Ukrainian federal, regional, local and commercial markets and can help them to better understand Ukrainian processes, needs and the local culture.

Foreign money and insurance – from the start of the war, many Ukrainian and international participants (including our own Agency) began to focus on bringing new investment projects and understanding the tools available for financing and insurance in Ukraine today and once the hot phase of the war ends. While FDI, debt financing and Political Risk Insurance (PRI), war insurance, export credit and breach of contract coverages, along with similar instruments are very important, it should be the proverbial number 175 on the list of priorities to rebuild Ukraine. The Rebuilding Ukraine Agency has an extremely deep and capable multi-country team to develop, finance and insure complex projects. We closely work with both government, private and capital market funding, and insurance sources in over 20 countries. Our members have successfully completed large and very complex financing in Ukraine over 27 years. What we see now is a very unorganized and poorly prepared market with a dearth of well-developed projects, deteriorating credit quality, unwillingness of many Western funders and local investors to participate and precious few selected projects ready for the financing/insurance applications submissions. The recipe for fixing this critically important issue will be a subject to a separate post.

Regional vs regional – Lviv region vs Zakorpatye vs Volyn, vs Chernihiv vs Odesa vs Kherson along with the other eighteen regions they all compete. They compete for economic development, for domestic and foreign investment, for more inhabitants, for more resources. During peaceful times, this type of competition is absolutely healthy and normal and should be left alone. Yet these are not peaceful times and the resources for which regions compete are foreign as well as domestic. The demographics are changing with manufacturing capacity and populations moving West or leaving the country completely. It is vital for the new market entrants to understand the effects of these changes in making their investment and financing decisions. It is also vital for the Regional and local authorities to understand the evolving situation and develop plans to make their regions more attractive for economic development, which are based on the new realities.

Local vs local – cities, towns, hromadas and villages – face much the same issues as the regions, but their woes are amplified. There are many of them, they greatly vary in size, economic advantages, location and population. Their credit quality is largely non-existent, or not sufficient to obtain any type of financing, other than from the Ukrainian Federal government, local taxes or utility fees. They education as to what is needed to attract Western counterparties is often below par and the local corruption is often high. All these sources are far from sufficient to help these cities and towns rebuild and jumpstart their economic activities post-war. For the last eleven months their issues have been largely ignored and this needs to change.

Shifting demographics, declining population, PTSD – by various estimates, about ten million people were displaced as the result of the war, about 4.7 million were forced to leave the country, and it is safe to predict that most of the 40 million Ukrainians will suffer the effects of PTSD. Thus, developing a coordinated plan to help welcome those refugees who will be coming back, replace those labor market participants who will not return and set up effective rehabilitation programs for those suffering from PTSD will be vital and will require strong coordination.

Reconciling Ukraine 5.0 with damaged pipes, schools and hospitals today – The mandate of the Ukraine’s government and its lawmakers, which is echoed by a number of private and NGO players, is to rebuild Ukraine better. Smart cities, energy efficient construction, new urban planning and other state-of-the-art features. But Ukraine is badly damaged, not destroyed. Thus, how to reconcile the planning of building an entirely new ultra-modern, energy efficient smart City, of which only maybe 20 percent has been damaged and for which the City administration desperately needs funds to repair broken pipes, streets, schools and kindergarten facilities today!!!! Do it piecemeal and you end up with a quilt patch of mediocre, and there is certainly no funding to do it all at once. Again, strong multiparty coordination is needed.

The Warsaw conference clearly showed the proper unique positioning and the leadership role of the Rebuilding Ukraine Agency. During the conference we have been approached by multiple European Governments and Government agencies, seeking to cooperate with the Agency and for us to assist their constituent businesses. The Agency has also conducted significant discussions with the private sector companies and with multiple Ukrainian municipalities. Current situation calls for completely different tactics. Investment projects and market entrance by the players new to Ukraine have to be curated and carefully developed. The Investment Promotion agencies, while useful, have no depth and expertise needed to see the projects through to their financing and completion. Over the next several months the Agency will significantly broaden its scope and membership roster. Stay tuned!

After two action-packed days, the basic thesis of the Rebuild Ukraine event may be summed up as follows: Private business looking to get into Ukraine and Ukrainian business looking for the western business expertise and financing, should be supported by their respective governments, IFIS and NGOs, but led into action by an international, experienced privately managed economic development organization, which has experience, cross-cultural awareness, stature and independence to act. This organization needs to be comfortable in talking to all Ukrainian and external stakeholders, as it will be a key interface between helping Ukraine get ready for Western investment, lending, insurance, supply and training. Support from international government investment promotion agencies is absolutely vital as is the support from the Ukrainian side on all levels. The analogy I often like to use is that of a major port where large passenger, cargo and at times military ships, come in and each one of them is big and mighty. Yet, in order for the port to operate successfully, small, agile tugboats are needed to coordinate all these large ships. Thus, either as the conductor of a large multinational Rebuilding symphony orchestra, or as the tugboat of the port of call named UKRAINE it is indisputable that Ukraine needs an experienced independent, multinational economic development organization to coordinate the massive rebuilding effort for the western players seeking to help the country. For the last eleven months, the members of the Rebuilding Ukraine Agency have been working on developing innovative training programs, financing solutions and economic development techniques applicable to the new realities of Ukraine. If your organization is interested in helping Ukraine rebuild efficiently and with the maximum benefit, please consider joining our Agency. Our team, and our esteemed members have the technical, legal, cross-cultural and financial tools required to deliver an orderly process where the resources are used strategically and the rebuilding process involving western companies, governments and financial institutions will have the maximum effect for every Hryvna, Dollar, Euro, Pound or Zloty spent.

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REbuild Ukraine – Warsaw Diary. DAY t-3

It is Sunday February 12th. I awoke to the news of more russian missiles falling on Kharkiv and on other Ukrainian cities, more news on the devastating earthquake in Turkey, US shooting down a third! flying object in a week, as the country prepares for today’s Superbowl. Yet amidst the ongoing wars, diplomatic conflicts and natural disasters, an important event will be taking place this coming week in Warsaw, Poland. It will be focused on the bright future of beautiful, resilient, war-torn Ukraine. Over the next week, I will attempt to document this event from the insider’s perspective. I will try to post daily, but given the schedule ahead, it may not be feasible. So please bear with me over the few days and I hope you find these diaries interesting and helpful.

As I write this, thousands of men and women from over twenty countries have begun to make their way to Warsaw for the Rebuild Ukraine Forum and Conference. This event is laser-focused solely on construction segments and will cover significant topics such as demining and handling of unexploded ordnance during the rebuilding, infrastructure restoration, construction material recycling, increasing Ukraine’s capacity to produce and supply vital construction materials such as insulation, plate glass, precast concrete, as well as developing real-estate projects, which will address Ukraine’s new realities such as shifting demographics and the need to restore and rehabilitate post-war the physical and mental health of the nation. The event will also be focused on how to finance, insure and develop projects, which will help Ukraine rebuild.

Unlike other political, macroeconomic, and academic events dedicated to the subject of the Rebuilding Ukraine, the Warsaw conference and exhibit is driven by the private business – the infantry of the recovery process. This is very important, as these folks vote with their own dollar, euro zloty or hryvna and are the first to go in and engage. What is even more important, is the fact that this event will facilitate a direct dialogue between the Ukrainian Government, multiple Ukrainian regions and municipalities and is expected to act as a starting point for several viable investment, construction and recovery projects.

After four months of preparation for the event, our own Rebuilding Ukraine Agency will be well-represented. Our delegation of 25 men and women will consist of the several Agency’s Board Members, the Agency’s CEO, Vice President and representatives of several Agency-member companies who will be showcasing their projects and capabilities. Although our Rebuilding Ukraine Agency is US-based and will be unofficially representing the United States at the event (other countries are having government-sponsored pavilions), the Agency is international in nature, and our Warsaw delegation will have members from six countries at the exhibit pavilion. Even though the event has not yet started, our Group’s meeting calendars are already well-booked, with meetings starting two days before the actual February 15th and 16th conference dates. Our Agency has been one of the co-organizers of the Rebirth of Nation panel and I will be speaking there on the financing and insurance opportunities available to foreign and local investors. Our Agency team is putting final touches on a Master Class for Ukrainian municipalities on how to develop and package projects for investment and financing by the international community.

So today, t-3 days until the official events kickoff, is the travel day for most of us. Overnight flights on LOT and Delta from the US, car and train rides from Ukraine, Italy, Germany and Croatia. Presentations and marketing materials are being delivered from Kyiv, where they were printed, despite drone attacks and power outages. As the self-appointed photographer for the Agency i will be chronicling the conference and activities taking place at our Agency’s pavilion. My luggage contains over 25 pounds of photographic equipment, including multiple lenses. Given the gravity of the events taking place in Ukraine, as this conference will be taking place, I am thinking of shooting the entire reportage in black and white. Have not yet made up my mind on this though.

Special thanks to everyone who has been involved in the preparation for this significant event. Our wonderful video and presentation designers, along with our terrific CEO and VP, members who supported the exposition, exhibit organizers and Board members who volunteered their time to make sure that the Agency is well-prepared not only for this event, but to help Ukraine, as it gets ready to REbuild itself after this devastating war. Stay tuned for additional coverage of the Warsaw conference in the upcoming issues.

By. Alexander Gordin, Chairman of the Board, Rebuilding Ukraine Agency

Rebuilding Ukraine Agency is 120 today

120 days that is. And yet, with the horrific war raging in Ukraine for the past five months, these 120 days seem like eternity. The Agency’s journey, thus far, has been an exhausting marathon filled with ups, downs and periods of frustration. Although, all our activities pale in comparison with the heroic efforts of the Ukrainian armed forces, civil defense and tireless volunteers, who provided incalculable help in delivering humanitarian aid and clean up of destroyed cities, we know that our work is important and is vital to the development of Ukraine’s economic future.

Just 90 days after its formation, the Agency announced its first economic development project – creation of a $25mil. production and distribution facility in the center of Ukraine to produce badly needed construction insulation materials. The project’s principal is a US-based company. Think about the courage required to make such an investment decision into a country embroiled in the brutal war. The agency’s role has been to assist with the project’s development on the ground and to arrange financing and insurance coverage for the facility. Not an easy task, but one for which the Agency has been specifically developed. We are a private, member-owned and rapid reaction organization with significant multi-disciplinary capabilities.

The investors into the insulation project are by no means a unique case. Other Agency members are hard at work developing projects ranging from pre-cast concrete, plate glass and ceramic block production facilities, medical rehabilitation centers, gas and agricultural infrastructure for transportation and storage, and expansion of healthcare facilities for cancer and neo-natal patients.

I am often being asked if the the Agency’s representatives will be attending various rebuilding Ukraine related forums, which have been springing up across several countries. My answer thus far has always been “NO”. While some of these forums are important and highlight policy discussions, international cooperation programs and legal scholars’ theories on subjects of whether it will be possible to use frozen Russian assets towards the cost of reparations, the Agency is laser-focused on its core mission of developing and fulfilling specific projects in key areas of Ukraine’s economy.

In the the movie “Schindler’s List”, the main hero was not able to save all the Jews from the horrors of holocaust, but he was able to make a huge difference by saving over a thousand souls, who in turn gave birth to a new generation. Thus far, the Agency’s approach has been similar. We monitor the policies and trends for rebuilding set by the Ukrainian government, follow various aid announcements etc. and keep our members informed on the developments. Yet, we are primarily concentrating on developing and executing as many specific impactful projects as possible, all while realizing that the Agency will not be able to solve all the problems caused by the war, but every project we successfully realize will make a difference.

I would like to congratulate all the Agency’s Members, Officers and Directors with this small, but important milestone in the life of the Rebuilding Ukraine Agency and I want to thank all the folks in Ukraine, US, Canada, UK and EU countries, who have supported our organization and have helped it move forward. Ukraine will overcome and we will be there to help it rebuild!

Investing in Ukraine’s energy-efficient construction

(June 24, 2022, Washington, DC, Kyiv).  The Rebuilding Ukraine Agency, with support of the National Investment Council of Ukraine, the Confederation of Builders of Ukraine and the U.S.-Ukraine Business Council, proudly announces that the Agency has been engaged to spearhead construction development, arrangement of financing and political risk insurance for a state-of-the-art building insulation manufacturing and distribution facility, to be inaugurated in Ukraine in the next several months. 

The proposed $25 million facility is being developed by the Depsol Technologies Group of companies– an experienced, US-based supplier of chemical raw materials to the construction industry in Ukraine and the Baltic countries. The planned facility will be located in the Central Economic District of Ukraine in close proximity to the markets most affected by the wartime destruction. The new plant will produce highly energy efficient and fire-resistant polyurethane insulation material ranging from flexible insulation to rigid structural panels, which will be used for construction and insulation of residential, commercial and industrial buildings. 

Given the substantial destruction of Ukraine’s existing insulation capacity and anticipated needs during the upcoming rebuilding phase, the planned initial production and distribution capacity of the Depsol facility will be 3 million sq.m. of insulation per year. The Depsol facility will have its own solar energy generation plant and will be built to the most rigorous international energy efficiency standards. Over 500 jobs will be created during construction and operation of the plant and of the adjoining distribution center.

The financing for the project is expected to be a combination of equity and European-export-credit-agency-(ECA)-backed loans. Political risk insurance is expected from the US-based government agencies.

About:

Depsol Technologies LLC. is a chemical company focused on distribution of construction insulation materials and production inputs, as well as plastics in and oil and gas chemicals in Ukraine and the Baltic countries.

Depsol’s senior management team has more than 20 years of experience in distribution and trading of plastics and industrial chemicals throughout FSU countries. Prior to establishing Depsol Technologies, Drs. Alfred and Irene Roth founded Dipol Chemical, a major distributor for Dow, Nova, DuPont, Solvay, Clariant in the region, which in 2008 has been successfully sold to the worldwide chemical distributor Brenntag.

Rebuilding Ukraine Agency (www.rebuildingUA.com) – Rebuilding Ukraine Inc. is the US-based member-owned international rapid deployment agency, that was founded in March 2022 with the sole purpose of helping Ukraine rebuild after the Russian war.

The agency represents the US, UK, EU, Canadian and Ukrainian professionals, financing institutions and manufacturers under a unified umbrella, in order to deliver maximum impact for the rebuilding effort of Ukraine. The agency’s team of professionals has decades of experience working in Ukraine and an impressive list of successfully completed projects in Ukraine and around the world.

National Investment Council – Office of the National Investment Council is an advisory body to the President of Ukraine.  It addresses Ukraine’s needs in support for the design and implementation of policy reforms and institutional capacity building, as well as investments. The National Investment Council of Ukraine was established by the Decree of the President of Ukraine N365/2016 and comprises the highest-ranking state officials. Chairman of the National Investment Council is President of Ukraine Volodymyr Zelenskyy, Secretary of the National Investment Council is Halyna Yanchenko

Members of the National Investment Council are leading international companies that have already invested in Ukraine or are planning to invest, as well as international financial organizations.

Confederation of Builders of Ukraine – formed 11 years ago, the Confederation of Builders of Ukraine is the largest specialized association, which unites more than 700 participants in the country’s markets for real estate, construction and construction material supply.

US Ukraine Business Council (USUBC) – The U.S.-Ukraine Business Council was established in October 1995 to advance U.S. companies’ trade and investment interests in Ukraine’s significant emerging market, advocate for measures to improve conditions for bilateral trade and investment, and generally promote strong, friendly bilateral ties. 

For more information contact Tamara Zykova at management@rebuildingUA.com

Broad Street Capital Group selects Lipman Law to provide due diligence support and General Counsel services.

(December 2, 2019, New York City, NY) In an effort to streamline its legal operations and to manage international due diligence and compliance processes for the $1.2 billion of financing transactions in its pipeline, Broad Street Capital Group announced today that it has retained Alex Lipman of Lipman law PLLC, to provide general counsel services. Alex Lipman has also joined Broad Street as an Advisory Board Member.

Most recently a partner at a major international law firm, Mr. Lipman has almost 30 years of experience both in private practice and government with focus on SEC enforcement matters, anti-corruption investigations, securities litigation, other regulatory and government matters, as well as corporate governance.

Alex’s government experience includes serving as a Special Assistant United States Attorney on the Securities and Commodities Fraud Task Force at the U.S. Attorney’s Office for the Southern District of New York. In that position he prosecuted and tried cases involving accounting fraud, mail and wire fraud, and insider trading. Alex also served as a Branch Chief in the SEC’s Enforcement Division, where he conducted numerous high-profile investigations into securities law violations, including cases stemming from the collapse of Enron.

In private practice,  Alex has successfully represented numerous individuals and entities in high-profile white collar securities cases, including cross-border investigations and international prosecutions.

Mr. Lipman also has been a key driving force in developing a proprietary Grey2White® Due Diligence Program designed to identify and solve complex legacy due diligence issues, as well as to optimize multiparty compliance inquiries, which arise during international financing transactions.

“We are very excited to have Mr. Lipman and his Firm advise our team. As the Broad Street Capital Group is poised to enter its next phase of growth, having a seasoned, internationally renowned legal expert in our corner, will help the firm’s clients not only to successfully navigate through complexities of international financing and M&A transactions, but will also allow them to unlock the value of their companies by putting in place best practices in the areas of financial reporting, anti corruption and corporate governance.” said Alexander Gordin, Managing Director of the Broad Street Capital Group.

“I look forward to working with Mr. Gordin and the Broad Street team on ways to improve and streamline the way due diligence and compliance are managed during international financing and merger transactions involving companies in emerging markets. Rather than engaging in a reactive, expensive and cumbersome process, the Grey2White® program aims to provide deeper due diligence investigations than conventional KYC screenings in advance of potential transaction. This would provide greater transparency from the start, reduce costs and benefit all parties involved in the transaction.” said Alex Lipman

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.

Currently, the Firm maintains presences in eight countries and works closely with all trade and development agencies of the U.S. Government, as well as with 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 agriculture IT/telecom, aerospace, healthcare, oil and gas,energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and financing portfolio is expected to exceed $1.25 billion by January 1st, 2020.

 

Getting Ukraine to become Fluent in EXIM.

How can US Exporters increase their exports to Ukraine and what do the latest developments mean for US EXIM programs there?

  Since the original Fluent In EXIM post was published on February 11th, several important events took place, which potentially may have an effect on how exports to Ukraine are financed by the Export Import Bank of the United States (US EXIM).

• New President of Ukraine was inaugurated a few days ago, potentially putting the country on a different political course.
• New, closer, date has been set for the elections of People’s Deputies into Ukrainian Rada
• US Congress confirmed three new Board members thus opening the  way for US EXIM to finance  projects over $10 million with a duration of financing  longer than seven years

Although not on the same level of importance as the above events, in March, in partnership with the US Ukraine Business Council (USUBC), our Firm held a financing workshop in Washington DC to help participants learn about available government financing programs, with the US EXIM  representative and its authorized broker prominently prominently featured on the agenda.  We have also received numerous EXIM financing inquiries from Ukraine, particularly in the areas of agriculture, renewable energy, transportation and healthcare. A second workshop for USUBC members and invited guests will take  place in Lviv later this month.

In this post, we will examine what, if any, effect these changes shall have on the US EXIM’s programs currently in place for that country. We will  also look at the ways Ukrainian importers and US exporters can best take advantage of these programs.

Currently, US EXIM is only open in Ukraine for short (financing of trade up to one year) and medium-term (financing of $10 million per project up  to seven years)  programs. Thus reopening the US EXIM for the long-term programs will not have any effect on Ukrainian export transactions.

Election of  the new President and upcoming Rada elections also are  not expected to  affect the US EXIM programs for the foreseeable future.

Yet despite the absence of the long-term programs, US EXIM bank remains an effective tool for US exporters wishing to export goods and services to Ukraine. Under its short-term program, the Bank will insure against buyer non-payment and political risks up to 95 percent of the foreign receivables’ invoice value, thus allowing exporters to safely extend open account terms to foreign buyers (both private and  government) for periods up to one year, with 90-day, 120-day terms being most prevalent.  This is done by putting in place either a Single Buyer, or Multi-Buyer credit insurance by the exporter and then qualifying and insuring individual importers under these policies. Depending on the policy limits sought, EXIM employs different underwriting standards and requires increasingly deeper credit checks and financial documentation.

Most qualified US exports, other than sales to of alcohol, tobacco and adult content, as well as sales to foreign military, may be insured; even equipment and services related to nuclear industry.  In Ukraine, larger private transactions will require a repayment guarantee from one  of the  five or so top banks and on the government side a sovereign guarantee is needed. Since it is almost impossible to obtain a UA government’s guarantee for smaller transaction amounts, the US exporters should focus selling their wares to the private sector.   The credit insurance may be obtained either from the Bank directly, or at no additional cost, through a cadre of US EXIM approved insurance brokers whose list is found on the exim.gov site.

Under its medium term programs, US EXIM can cover up to 85 percent of qualified US exports, including eligible freight and duty costs. As mentioned above, financing limit is $10 million per distinct transaction, and repayment terms of up to seven years apply.  For projects, which require local construction or installation (ex solar farms, grain silos), up to 30 percent of the financed amount maybe used to cover local costs performed by Ukrainian companies.

Depending on the project, repayment of the financing may be structured as interest only for up to two  years, with the balance of principal and interest paid out evenly over the remainder of the loan term.  Services such as engineering, architecture, design, legal and financial, all may be financed under this program.

Although US EXIM can lend funds directly at what is commonly known as a CIRR  rate, more often it  issues a its AAA rated guarantee and the exporters then approach an approved bank to secure financing rates, which are  usually more advantageous, as they are based on LIBOR and can either be variable, or fixed depending on the borrower’s preference.  Underwriting requirements of bank guarantee  for the private transactions, or sovereign guarantee for government purchases also apply. Many borrowers choose to finance the remaining 15% percent through those same  local banks  thus effectively securing 100% financing for their projects.

Since the process of securing financing and insurance coverage  through any government agency, or an international financial institution is quite complex, we always recommend  that clients engage a qualified and experienced financial adviser and a very competent law firm with extensive experience working with the US EXIM Bank.

To get more information on the upcoming Fluent In EXIM workshop in Ukraine, please  contact MorganWilliams at mwilliams@usubc.org

 

 

 

 

 

 

 

 

 

World Affairs Councils of America Welcomes Broad Street Capital Group as National Affiliate Member and Sponsor

Washington, DC, May 14, 2019 — The World Affairs Councils of America (WACA) is pleased to announce that Broad Street Capital Group (www.broadstreetcap.com) has joined WACA as a National Affiliate Member, sponsor of the WACA National Conference, and member of its prestigious 1918 Society.

Broad Street’s expertise in advising on foreign direct investment (FDI) strategies in emerging and frontier market countries and WACA’s ability to convene foreign government leaders and influential audiences through its extensive network of more than 90 World Affairs Councils across the United States will provide a powerful platform for U.S. companies targeting investment opportunities and seeking policy and regulatory knowledge in these markets.

Broad Street will tap the WACA platform to conduct a national tour to educate potential U.S. investors on available U.S. Government financing options, as well as political and trade risk mitigation tools. WACA will assist Broad Street in organizing bilateral trade missions and curated foreign policy tours to highlight economic advantages of the target markets and to facilitate trade and investment opportunities.

“It is an honor and a privilege to become WACA’s newest National Member,” said Alexander Gordin, co-founder and Managing Director of the Broad Street Capital Group.  “My colleagues and I look forward to helping this prestigious 100-year old national organization to grow into the next century of its existence.  Foreign direct investment is an essential  part of sound foreign policy for any nation and having such an esteemed partnership with the WACA network’s convening power on this issue, would definitely bring significant measurable results.”

“WACA is delighted to collaborate with Broad Street and we look forward to inviting leading investors and representatives of foreign investment agencies as guests of the Broad Street Capital Group at WACA’s 2019 National Conference in Washington, DC,” said Bill Clifford, President and CEO of the World Affairs Councils of America.

Scheduled for November 6-8 at the Mayflower Hotel in DC, the WACA Conference will feature more than 50 leaders and policy experts on the theme: “The 8 Forces Reshaping the Global Economy.”

About the Broad Street Capital Group

Based in the heart of New York City’s Financial District, Broad Street Capital Group (www.broadstreetcapital.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 maintains a permanent presence in London, Budapest, Kyiv, Tashkent, and  Astana, .  Since its founding, Broad Street Capital 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, health care, energy generation, food security, nuclear safety, hospitality and franchising sectors. The firm’s current advisory and export management portfolio exceeds $900 million.

About the World Affairs Councils of America

The World Affairs Councils of America (www.worldaffairscouncils.org) is an independent, nonpartisan organization dedicated to engaging the public and leading global voices to better understand the world, America’s international role, and the policy choices that impact our daily lives and our future. WACA carries out its mission by:

• Supporting more than 90 World Affairs Councils across the United States and promoting programs and educational initiatives for diverse local audiences – from classrooms to C-suites, from town-hall style community forums to conferences in the nation’s capital.
• Developing Councils’ convening power nationwide by providing face-to-face connections and dialogue with global leaders, business executives, policy and trade experts, ​social innovators, and distinguished opinion makers.
• Partnering with organizations that seek to reach out to “grassroots” and “grasstops” citizens, disseminate research, mutually expand networks and transform how people, enterprises, and governments think about the world.
• Challenging the next generation to develop leadership skills and global acumen so that our communities can better compete, collaborate, and make informed decisions.

 

Senate vote restores full financing capabilities of the US EXIM Bank

(story by CC Solutions) The U.S. Senate confirms three EXIM board members, thus allowing the Bank to restore all its financing programs

Companies in Berlin, Germany; Shanghai, China; Melbourne, Australia, and Delhi, India have long enjoyed the full support of their export credit agencies, which have helped them reach new markets, grow, prosper, and increase employment in their respective countries. Today, exporters in Berlin, Connecticut; Shanghai, West Virginia; Melbourne, Florida; Delhi, New York; and thousands of other cities and towns in the United States can finally say that they have the full support of their own export credit agency. This morning the U.S. Senate voted overwhelmingly to confirm Kimberly Reed as President of EXIM, and Spencer Bachus III and Judith DelZoppo Pryor, as Members of the agency’s Board of Directors. With the confirmation of these officials, EXIM now has a board quorum, and is now able to approve financings larger than USD 10 million and longer than 7 years, something it has not been able to do since 2015. For those companies interested in learning more about long-term  US-EXIM programs please contact Broad Street Capital Group at info@broadstreetcap,com

Fluent In EXIM

(or how to realistically obtain US EXIM financing for emerging markets such as Ukraine)

 Recent re-opening of US EXIM Bank’s programs in Ukraine has caused a stir and a flurry of activity among US exporters, Government Agencies responsible for trade promotion, Ukrainian importers and non-governmental agencies working in that market.  Following more than a five-year hiatus, everyone has been excited to expand US-Ukraine’s trading relationship and to increase the quantities of much-needed US exports with the aid of the Bank’s financing.  After all, US exports support US jobs and help Ukraine obtain advanced goods and services needed to grow its economy.

Yet, the early results of all those efforts thus far been negligible due to a dearth of local buyers able to qualify for the Bank’s financing, or trade credit insurance programs. Similar situation has been observed in a number of Central Asian markets, which have recently experienced economic resurgence and thirst for imported goods and services.

In order to enhance the ability of the US Government’s agencies to assist in export promotion and financing and most importantly in order to maximize the ability of US companies to export goods and services to emerging markets, it is vital to understand what are the services provided by the US EXIM and what external components are needed to help grow the numbers of qualified buyers and therefore real exports.

Export Import Bank of the United States (US EXIM) is the official Export Credit Agency (ECA) of the US Government, whose mission is to support export of US-manufactured goods and services with a set of export financing and trade credit insurance tools.

Open for business in over 120 countries, the bank has been in continuous operation since 1934 and for a good number of years of its existence has been contributing profits to the US Treasury, rather than spending the US Government’s budget funds.  Although over the last several years, the Agency has become a victim of political wrangling and its long-term financing programs, those involving terms over 7 years and single transaction amounts over US$ 10 million have been temporarily crippled, the bank’s short and medium programs have continued and are fully operational.

However, when trying to finance, or insure exports to emerging and frontier market countries using US EXIM’s programs, American exporters often face additional hurdles. One of the most severe of those, is finding sufficient number of qualified, or as we call them “bankable” buyers for US goods and services. The second hurdle is often lack of the so-called “15%”, a minimum amount of funds needed from the buyer to supplement the up to 85% of the qualified export amounts financed through the US EXIM’s support.

Here are a couple of typical export frustration scenarios:

a. A large US manufacturer of agriculture equipment with an established distribution network in Ukraine seeking to supply its distributors with $5-6 million dollars in equipment to be sold to Ukrainian farmers prior to the planting season. The US supplier needs to extend open terms of 6 months to its distributors, but needs to insure its risk of non-payment. The US EXIM offers fantastic trade credit insurance products, which after assessing and accepting the buyers’ financials would insure  the US manufacturer for non-payment of up to 95% of the supplied goods.

Yet, for purchase contracts of over $1mil., US EXIM requires the buyers to present  GAAP/IFRS audited financials and in this case none of the distributors audits their financials and doing so may either be not feasible, or cost prohibitive.  Since the distributors appear very financially and reputationally solid, yet unable to meet EXIM’s cursory requirements, the question becomes how to structure the transaction in order to enhance US EXIM’s product and not lose millions of dollars in sales for the US manufacturer?

b. An established Ukrainian agri company is seeking to replace its fleet of machinery and upgrade its grain storage capacity with US manufactured equipment. Size of the transaction is $15 million. To preserve much needed operational cash, the company would like to arrange 100% financing of the acquisition for a term of six years.  The company does audit its financials to IFRS standards, but due to a fairly small transaction size and lack of knowledge of the Ukrainian market by US banks, the company is having a very difficult time, obtaining the 15% co-financing it needs. Once again, $15 million of US exports are in potential jeopardy, what does one do in a situation such as this?

To answer the above questions and to realistically address the issues, which hamper successful export financing in markets such as Ukraine, a task force consisting of a US merchant bank, international law firms, local banks, non-profits and insurance brokers has been created and effective tools developed to truly assist US exporters convert potential opportunities into real exports. Starting later this month in Washington DC, these tools will be presented in a series of workshops called “Fluent In EXIM”. The workshops also will take place both in key Ukrainian and US cities. Given the importance of the US exports to jobs creation and since US EXIM bank is operated under the the supervision of the US Congress, the workshops, in addition to expert panels, will feature members of Congress, as guest speakers. US Ukraine Business Council, a leading non-profit involved in promoting US-Ukraine economic cooperation, will be coordinating these workshops and helping to make US companies trying to export to Ukraine – Fluent In Exim(tm).

 

 

 

 

U.S. EXIM BANK reopens for transactions with Ukraine

 “A strong international voice for business in Ukraine”U.S. EXPORT-IMPORT BANK (EXIM) NOW OPEN FOR UKRAINE

U.S.-Ukraine Business Council (USUBC), Wash. D.C., Tues, Jan 8, 2019

WASHINGTON, D.C. – The Export-Import Bank of the United States (EXIM) is now open for Ukraine. “This is great news for U.S. exporters of goods and services and for business in Ukraine. EXIM being open for Ukraine provides an additional and important tool to expand U.S.-Ukraine business relations in 2019,” said Morgan Williams, President, U.S.-Ukraine Business Council (USUBC), www.USUBC.org. The Export-Import Bank of the United States (EXIM), www.EXIM.gov, is the official export credit agency of the United States. EXIM is an independent Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services. The EXIM country limitation schedule now includes Ukraine, https://www.exim.gov/tools-for-exporters/country-limitation-schedule. 

“At the end of December, the Export Import Bank of the United States (EXIM) reopened its short and medium term programs in Ukraine for both private and public sector Ukrainian borrowers,” said Alexander Gordin, Managing Director, Broad Street Capital Group, www.BroadStreetCap.com, a long-time member of USUBC. “The reopening  of EXIM’s programs in Ukraine, after more than five years, sends a terrific signal to U.S. companies seeking to supply the Ukrainian market with U.S. goods and services. It also sends an encouraging message to investors on the improving economic condition in Ukraine,” according to Gordin. “The U.S.-Ukraine Business Council (USUBC) will be working the Broad Street Capital Group and the law firm of Brown Rudnick (www.BrownRudnick.com), both members of USUBC, to organize and conduct a series of workshops titled “Fluent In EXIM” in the near future in the USA and Ukraine,” said USUBC President Williams. “These workshops will feature experts from the public and private sector who will present the most effective strategies for structuring export transactions, submitting applications for export credit insurance and financing, as well as passing due diligence and compliance procedures,” Williams announced. 

ABOUT: EXPORT-IMPORT BANK OF THE UNITED STATES (EXIM) —– The Export-Import Bank of the United States (EXIM), www.EXIM.gov, is the official export credit agency of the United States. EXIM is an independent Executive Branch agency with a mission of supporting American jobs by facilitating the export of U.S. goods and services.
When private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap for American businesses by equipping them with the financing tools necessary to compete for global sales. In doing so, the Bank levels the playing field for U.S. goods and services going up against foreign competition in overseas markets, so that American companies can create more good-paying American jobs.

Because it is backed by the full faith and credit of the United States, EXIM assumes credit and country risks that the private sector is unable or unwilling to accept. The Bank’s charter requires that all transactions it authorizes demonstrate a reasonable assurance of repayment; the Bank consistently maintains a low default rate, and closely monitors credit and other risks in its portfolio.==========================================================
NEWS: For the latest news about Ukraine go to the KYIV POST website: www.KyivPost.com.The Kyiv Post is a member of the U.S.-Ukraine Business Council (USUBC). 
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U.S.-Ukraine Business Council (USUBC) 
1030 15th Street, N.W., Suite 555 W, Washington, D.C.  
Morgan Williams, mwilliams@usubc.org, www.USUBC.org
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Power Corrupts..Absolute Power Corrupts Absolutely