BAE SYSTEMS Project Finance Initiative 2
In a typical joint venture in Saudi Arabia supported by British Offset, the Saudi and foreign partners may each have a 50% share holding.
The BAE SYSTEMS Project Finance Initiative offers the foreign partner a low interest non-recourse loan for up to 50% of its stake in the venture. If the equity stake is 12.5% of total project funding this means the foreign partner has all the benefits of a 50% shareholding in the joint venture company for just 6.25% investment.
As a further measure to help reduce risk, the loan repayment schedule is based on the dividend payments made by the joint venture company.
If a Saudi bank requires a parent company loan guarantee, BAE SYSTEMS will contribute a share of the guarantee on a pound for pound basis. The maximum value available is usually $10 million and can be either all loan guarantee, all equity loan or split between both.
|Funding structure for a joint venture||Technology partner|
|1. 50% Saudi Industrial Development Fund
2. 25% Local banks
3. 12.5% Saudi partner
4. 12.5% Technology partner
|A. 6.25% BAE SYSTEMS soft financing loan
B. 6.25% to be funded by the technology partner
Animated explanation of funding
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