Despite the global economic downturn, Australian businesses continue to find exciting opportunities to trade and expand overseas. It's at times like these that viable international opportunities can be at risk due to the challenges in providing adequate security to underpin the financing required. Often the bank may agree with their customer’s potential for success, but simply can’t look beyond the balance sheet.Today, the resources boom is creating a new gap in financing for export contracts. Strong demand from both the large corporate and SME sectors, particularly those involved in or supplying to the Australian mining and resources industry is creating further demand for services from Australia’s export credit agency, Export Finance and Insurance Corporation (EFIC).
Despite the global economic downturn, Australian businesses continue to find exciting opportunities to trade and expand overseas. It's at times like these that viable international opportunities can be at risk due to the challenges in providing adequate security to underpin the financing required. Often the bank may agree with their customer’s potential for success, but simply can’t look beyond the balance sheet.Today, the resources boom is creating a new gap in financing for export contracts. Strong demand from both the large corporate and SME sectors, particularly those involved in or supplying to the Australian mining and resources industry is creating further demand for services from Australia’s export credit agency, Export Finance and Insurance Corporation (EFIC). Onshore projects with export supply contracts in place are increasingly calling on EFIC and international ECAs to participate in their financing while SMEs supplying these projects are also seeking EFIC and bank support.
That was the case of Lean Field Developments Pty Ltd (Lean Field) which won their first major Australian pipe laying contract with QGC Pty Limited (QGC), a subsidiary of Britain’s BG Energy Holdings Limited, for the installation of gas and water pipelines in Queensland’s Surat Basin.
The Brisbane-based start-up, specialising in servicing the rapidly developing coal seam gas industry in Queensland, is part of the supply chain to the massive Queensland Curtis LNG project.
Like other suppliers, Lean Field was required to provide performance bonds to QGC in support of its contractual obligations under the pipe laying contract. The company also needed additional liquidity for existing and proposed contracts. However, as a company without a long trading history in Australia, it was unable to obtain traditional bank finance for performance bonds.
Lean Field was able to meet its contract obligations with the backing of an EFIC’s bonding line and an export working capital guarantee facility to support a standby loan facility from the Company’s bankers.
For more information: visit www.efic.gov.au.