With more than 50 years of experience, The Robbins Company, a small business based in Solon, Ohio, is considered by many to be the world’s foremost developer and manufacturer of hard-rock tunnel-boring machines. Yet, even with its position in the marketplace, The Robbins Company needed a larger loan than the company’s regular bank could provide to fulfill the largest order in the company’s history: the AMR Water Project in Andhra Pradesh, India.

The company found the solution to its financing problem in the Working Capital Guarantee Program of the Export-Import Bank of the United States (Ex-Im Bank), the official U.S. export credit agency. With an Ex-Im Bank-backed loan from the Wells Fargo HSBC Trade Bank, The Robbins Company was able to secure its biggest contract. This public-private lending partnership made all the difference.

Huge environmental project

For the project, the government of Andhra Pradesh contracted with an Indian company, Jaiprakash Associates Ltd., which subcontracted to The Robbins Company the manufacture of tunneling-boring equipment, local services and tunnel-construction supervision.

The Robbins Company’s $131-million contract is for two large tunnel-boring machines and related equipment to build a tunnel that will supply potable water to 300,000 acres of drought-stricken farmland and 516 villages in Andhra Pradesh. The 10-meter-wide, 27-mile-long tunnel will bring water to the Srisailam Reservoir, which is located in the Rajiv Gandhi Wildlife Sanctuary.

The tunnel will be built 300 feet under the ground of a tiger reserve to avoid building a pipeline through the tigers’ habitat. The environmental sensitivity of the project is so impressive that The Robbins Company won Ex-Im Bank’s 2007 Small Business Environmental Exporter of the Year Award at the agency’s annual conference held in April in Washington, D.C.

“Supporting U.S. small business exports and environmentally beneficial exports are top Ex-Im Bank priorities in carrying out our mission,” said Ex-Im Bank Chairman and President James H. Lambright. “We are delighted that The Robbins Company gave us the opportunity to demonstrate our commitment to both priorities at the same time, and in the process, to help them create and sustain U.S. jobs.” To meet its contract, The Robbins Company has added about 50 employees to its payroll.

Solution to a financial challenge

Initially, the transaction proved to be a financial challenge because customer advance payments of $25 million during the manufacture of the equipment are required to be 100 percent-secured by standby letters of credit or bank guarantees. The transaction was too large for the company’s regular lender, Huntington National Bank in Cleveland.

The Robbins Company turned to Ex-Im Bank, the federal agency that had assisted the company in obtaining working capital when it first began exporting. Jim Virost, chief financial officer of The Robbins Company, contacted Mike Howard, director of Ex-Im Bank’s Midwest regional office in Chicago, who quickly suggested the newest feature of Ex-Im Bank’s Working Capital Guarantee Program called “Fast Track.” Howard suggested a number of qualified lenders with “Fast Track” delegated authority from Ex-Im Bank, and Virost contacted the Wells Fargo HSBC Trade Bank.

Ex-Im Bank’s “Fast Track” program enables small and medium-sized U.S. exporters to obtain larger Ex-Im Bank-guaranteed working capital loans in less time. Under the program, qualified commercial lenders approved by Ex-Im Bank can provide up to $25 million per borrower in Ex-Im Bank-guaranteed working capital loans, subject to a total aggregate limit of $300 million per lender.

According to Virost, the Andhra Pradesh tunnel project would not have been possible without Ex-Im Bank. “We needed a loan guarantee quickly. Through the Wells Fargo HSBC Trade Bank, which has the “Fast Track” delegated authority from Ex-Im Bank, we received the $25 million Ex-Im Bank working capital guarantee to support standby letters of credit provided by the Trade Bank to secure advance payments made by our Indian customer. We had the financing we needed in 45 days,” Virost said.

The Wells Fargo HSBC Trade Bank, based in San Francisco, is an equity joint venture between Wells Fargo and the HSBC Group. The Trade Bank is the only nationally chartered bank dedicated exclusively to international trade.

“When Robbins approached the Trade Bank for assistance, we were excited to consult with them and the region of Andhra Pradesh on such a pivotal project under Ex-Im Bank’s Fast Track program,” said Lynn Durning, regional vice president of the Wells Fargo HSBC Trade Bank in Chicago. “As a major user of Ex-Im Bank’s programs, we quickly obtained financing approval for one of the largest and most important transactions in the company’s history. Working with Ex-Im Bank, we developed a financing structure that addressed the project’s funding needs while mitigating its financial and cross-border risk.”

Working capital for small- and mid-sized exporters

Ex-Im Bank’s Working Capital Guarantee Program is an asset-based lending program for U.S. exporters that guarantees working capital loans based on inventory and accounts receivable related to exports. Ex-Im Bank guarantees 90 percent of the working capital loan, including principal and interest. The guarantee can cover either a single loan or a revolving line of credit that can support several export transactions.

Ex-Im Bank’s working capital guarantee can be used to support loans to finance foreign receivables; purchase finished products for export; pay for raw materials, equipment, supplies, labor and overhead to produce goods or provide services for export; and cover standby letters of credit serving as bid bonds, performance bonds or payment guarantees.

Ex-Im Bank’s working capital guarantees are available through an extensive nationwide network of delegated-authority lenders that can commit Ex-Im Bank’s working capital guarantee at the time the loan is processed. Depending upon their experience with the program, qualified lenders are granted different levels of delegated authority with various loan limits.

In fiscal year 2006, Ex-Im Bank authorized a record level-nearly $1.2 billion-in working capital guarantees, and almost 89 percent of these working capital transactions supported U.S. small businesses. Of the 492 working capital transactions authorized, 92 percent were approved through delegated-authority lenders.

Support for environmental exporters

Ex-Im Bank also achieved another important milestone in fiscal year 2006. Ex-Im Bank supported $385 million of U.S. environmentally beneficial exports through its working capital guarantees-more than double the amount of these exports supported by this type of financing the previous year.

“It has been estimated that, globally, environmental technologies combined represent a $650-billion industry and that 60 percent of that market is beyond U.S. borders. This represents an enormous opportunity for U.S. environmental companies,” said Ex-Im Bank Vice Chairman Linda Mysliwy Conlin at Ex-Im Bank’s 2007 Small Business Awards ceremony. Conlin oversees Ex-Im Bank’s environmental portfolio and heads a team of Ex-Im Bank trade finance professionals who work to identify and assist U.S. environmental exports.

“If you’re an environmental exporter, Ex-Im Bank wants you to know that you’re at the heart of our mission to support U.S. jobs and competitiveness, and also to help developing markets access unsurpassed U.S. environmental technologies,” said Conlin. “Whether you are an exporter or a lender seeking to support your customers’ global business, bring us your transactions, no matter how challenging. We will work with you to get them financed.”

The first step

To learn more about Ex-Im Bank’s financing products for U.S. small businesses and environmental exporters, and to obtain contact information for delegated-authority lenders, visit the agency’s Web site at www.exim.gov. Send business inquiries to smallbizusa@exim.gov.

Ex-Im Bank has regional offices in New York, Chicago, Houston, Miami, and three offices in California: Orange County, San Diego and San Francisco. To speak to an Ex-Im Bank trade finance professional, call 1-800-565-EXIM (3946), and press “2” to reach the nearest Ex-Im Bank regional office. wt