Specific Credit Programs

Ship-Building Finance and Guarantee Program

The Purpose

The aim of this program is to support Turkish dockyards to increase their share of international markets. Under this program, Turkish companies involved in shipbuilding and/or exporting of ships will be provided direct loans and/or Letters of Guarantee so that they may obtain pre-financing either in advance or in installments from the buyer or they can buy supplies & materials with payments having a fixed term.

Description

Under this program the Bank provides;

·   Direct loans, which will be extended to Turkish ship builder/or exporter to finance shipbuilding expenditures related to the specified contract.

·   Letters of Guarantees consist of;

• Advance Payment Guarantee Letters guaranteeing the sellers payment obligations against advance payments made by the buyer in the event that the contract is cancelled by the seller due to reasons stated in the contract and/or
• Performance Guarantee Letters guaranteeing the payment obligation up to the amount of goods imported or bought by the seller domestically.

The Letter of Guarantees to be issued for the Turkish firms involved in shipbuilding and/or the exporting of ships can be given;

·         To the buyers bank (as a Refund Guarantee for advance payments)

·         To the buyer (as a Refund Guarantee for advance payments)

·         To the suppliers bank (for L/C’s)

·         To the supplier

Maturity

Maturity for these bonds/direct loans are determined by Turk Eximbank specifically for each project according to the provisions of the contract, but also observing the maximum 24 month-period in case tax exemptions are granted.

Max. Coverage

The amount of the L/G's/direct loans are determined by Turk Eximbank by each project, but it should not be more than the % 85 of the total contract price.

Interest Rates/Commissions and Fees

The interest rates/commissions charged by the Bank are determined according for each project specifically depending upon the construction period, the market conditions, the repayment term and risk and past performance of the shipbuilders and buyers.

Special Provisions Related to the Turkish Content and Equity Content

The Turkish content of the ship concerned with the contract should be at least % 25 of the total contract price and the equity content of the firm should be % 15 or more.

Collateral

The collaterals accepted by Turk Eximbank are:

• Letter of guarantee from a private Turkish bank or
• Treasury bills and government bonds or
• First-priority mortgage over the vessel under construction

Application Procedure

The company must submit all the necessary documents specified on the Operational Manual of this Credit Program. The final decision is subject to the approval of the Board of Directors of Turk Eximbank.

Last saved: February 23, 2006