AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYNo
Financial assistance in foreign market
The overseas investment loan agreement in project financing between JBIC and British Agility Trains East Limited has a maximum value of GBP 860 million (USD 1,438.52 million). Japanese Hitachi Ltd holds an equity stake in the British company.
Additionally, the loan is co-financed by a number of private financial institutions as well as the European Investment Bank amounting to an approximate value of GBP 2 billion (USD 3.35 billion). The governmental agency Nippon Export and Investment Insurance will provide an Overseas Untied Loan Insurance for the portion co-financed by private financial institutions.
The loan finances the British company's East Coast Main Line project, which is part of the Intercity Express Programme. In this project, Agility Trains East Limited will purchase a rail car, develop railway depots for maintenance and lease trains to the train operator of the East Coast Main Line with a 30-year maintenance service period.
In this context, the bank stated: "This loan is intended to support with long-term funding in pound sterling a railway project of Hitachi in the UK, which has been actively developing social capital by making use of private sector funds. Thus it will contribute to maintaining and strengthening the international competitiveness of Japanese industries."
Overseas investment loans
JBIC provides direct loans named overseas investment loans to Japanese companies, overseas affiliates or joint ventures where Japanese companies hold equity interests and governments or financial institutions partying with such overseas affiliates. Loans support projects in specific sectors or with a specific purpose of interest to Japan. Further information can be found on the Bank’s website under overseas investment loans.
Project financing loans include preferential terms such as repayments being solely made from the project’s cash flow generation and secured on the basis of the project's assets alone. As such the loan agreement is tied to the project's finances and not the company in question.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets and from foreign subsidiaries.
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