The Export-Import Bank of the United States (Ex-Im Bank) is continuing its support of US exporters using letters of credit (L/Cs) by providing a multi-million dollar working capital loan guarantee to a small California-based technology company.

Retech Systems, a manufacturer of advanced thermal-processing equipment, will use a US$20 million working capital loan guarantee from Ex-Im Bank to export its metals-processing equipment to Shanghai Baoshan Iron and Steel Co Ltd of China.

Titanium boost

The guaranteed lender, San Francisco's United Commercial Bank (UCB), is providing the loan facility to support three export contracts signed by Retech Systems with Baoshan.

The equipment will be used to increase titanium production for China's domestic market.

Financing structure

Retech Systems will receive advance and milestone payments from Baoshan during the equipment-manufacturing period.

The Ex-Im Bank-guaranteed loan facility from UCB will be used primarily to enable Retech to issue standby L/Cs to Baoshan as prepayment guarantees.

Retech Systems will also use the loan facility for other working capital needs related to the Baoshan contracts.

Ex-Im Bank support

Retech says Ex-Im Bank has provided it with support over the past five years for several contracts across the world with a total value of over $55 million.

Support for the Baoshan contracts has been provided under Ex-Im Bank's Working Capital Guarantee Programme, an asset-based lending facility for US exporters that guarantees working capital loans based on inventory and accounts receivable related to exports. Ex-Im Bank guarantees 90 per cent of the working capital loan, including principal and interest.

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