EXIM Finalizes First-Ever U.S. LNG Export Transaction in Support of 200 American Jobs
January 8, 2021
(Ex-Im Bank)
Action Finalizes EXIM Board’s September $50 Million Authorization for
Houston-Based Freeport LNG; First Use of EXIM’s Groundbreaking Supply Chain
Transaction with Funder Guarantee
WASHINGTON — Building on the Export-Import Bank of the United States (EXIM)
Board of Directors’ September 29, 2020, unanimous approval of a supply chain
transaction, EXIM President and Chairman Kimberly A. Reed today announced the
signing of two final agreements to make the deal – with the first-ever use of
a funder guarantee structure – operative and $50 million available to Freeport
LNG, a Houston, TX-based exporter of U.S. liquefied natural gas (LNG). The
transaction is estimated to support 200 American jobs, principally in Texas, as
well as through supplier networks in Arkansas, Louisiana, Mississippi, and
Oklahoma.
The groundwork for this structure was laid on September 8, 2020, when the EXIM
Board of Directors unanimously approved the renewal of EXIM’s partnership with
the Private Export Funding Corporation (PEFCO) for 25 years and directed EXIM
staff to draft and implement final funder guarantee agreements.
The two specific agreements signed by Chairman Reed—an Enhanced Guarantee
Agreement between EXIM and PEFCO and a Tripartite Agreement between EXIM, PEFCO,
and Greensill Capital—implement a 90 percent guarantee of a $50 million supply
chain finance facility from Greensill Capital to Freeport LNG Marketing, LLC.
“This announcement marks several firsts. From the outset of my tenure as
Chairman of EXIM, I prioritized our agency’s support for U.S. LNG exports, and
today’s announcement marks EXIM’s first-ever financing for this critical
domestic industry. I thank our EXIM team for their innovative work to develop an
important new tool in our nation’s trade toolbox—a groundbreaking supply
chain structure with funder guarantee,” said EXIM Chairman Kimberly Reed.
“And this particular transaction, which will provide $50 million in financing
for Houston-based Freeport LNG, will help many U.S. small businesses and workers
across Arkansas, Louisiana, Mississippi, Oklahoma, and Texas in an industry and
related supply chains that are working hard to rebound from the negative impact
of COVID-19.”
Chairman Reed added, “In addition, with these agreements, we are sending a
signal to the market that EXIM, working in partnership with the private sector,
now has an additional tool to support U.S. exporters and workers. The recent
EXIM-PEFCO partnership renewal is making a real difference in our American
supply chains—in this case, in the incredibly important U.S. LNG sector.”
“PEFCO is delighted to partner with Greensill and EXIM on this transaction
bringing capital market funded liquidity to the EXIM Supply Chain Finance
space,” said PEFCO Senior Vice President Gordon Hough. “It is important to
PEFCO that we are able to work with our partners to support EXIM’s rejuvenated
supply chain finance program and we are eager to participate in other
EXIM-supported supply chain finance transactions.”
“For many leading organizations -- particularly those looking to innovate in
established markets -- off-the-shelf solutions and traditional approaches are
simply not good enough to unlock the working capital they need to operate and
grow, while at the same time protecting them against potential risks,” said
Lex Greensill, Founder and CEO of Greensill Capital. “They need custom
solutions to precise challenges, which is why our clients have turned to us for
many years. We are proud to have worked with Freeport on this milestone
transaction, which represents EXIM’s first in the U.S. LNG industry as well as
its latest innovation in supply chain finance. EXIM continues to demonstrate
leadership in delivering innovative product solutions tailored to client needs,
and Greensill looks forward to continuing its partnership with EXIM and PEFCO in
support of U.S. exporters and small businesses.”
“Working capital support is essential for any supplier of free on-board LNG.
Greensill and EXIM were able to help us fill this crucial need with a unique
structural set up that will allow Freeport and its suppliers to more efficiently
provide the global market with U.S. LNG,” said Michael Smith, Founder,
Chairman, and CEO, Freeport LNG. “We are pleased to be a part of this
innovative transaction that will support U.S. jobs and the energy transition
around the world.”
On August 21, 2019, Chairman Reed hosted a roundtable discussion and
teleconference with LNG business leaders, including the American Petroleum
Institute, Center for Liquefied Natural Gas, LNG Allies, and the U.S. Chamber of
Commerce to discuss ways EXIM can assist with increasing the volume of domestic
LNG exports. On March 5, 2020, Chairman Reed delivered remarks at a U.S. LNG
export hosted by the U.S. Trade and Development Agency (USTDA), U.S. Chamber of
Commerce’s Global Energy Institute, and LNG Allies, where she underscored
EXIM’s commitment to USTDA’s U.S. Gas Infrastructure Exports Initiative
(link is external), which is designed to connect American companies to export
opportunities across the gas value chain in emerging economies.
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