ANNOUNCEMENT 29 Oct 2014In October 2014, the government of Japan announced new support for the overseas expansion of domestic firms.
NUMBER OF INTERVENTIONS
The Japan Bank for International Cooperation press release: Project Financing for Freeport LNG Project in U.S. Available at: http://www.jbic.go.jp/en/information/press/press-2014/1030-31838
Freeport LNG press release: Freeport LNG signs 20-year liquefaction tolling agreements with Osaka Gas and Chubu Electric. Avaliable at: http://www.freeportlng.com/PDFs/20120731_pr.pdf
JBIC information on overseas investment loans: http://www.jbic.go.jp/en/finance/investment
On 29 October 2014 the Japan Bank for International Cooperation (JBIC) signed an overseas investment loan agreement with American FLNG Liquefaction, LLC in project financing amounting to approximately USD 2.6 billion. The loan finances the construction and production of LNG amounting to an estimated 4.4 million tons per annum, per train.
The company is owned by Freeport LNG Development L.P., of which Japanese Osaka Gas is a limited partner. Japanese Osaka Gas and Chubu Electric have pursuant to the project obtained usage rights of the plant's production capacity over an initial 20-year term.
Freeport LNG's Chief Executive Officer, Michael S. Smith, in this context stated 'As two of the largest natural gas and electric utility service providers in Japan, having liquefaction tolling agreements with Osaka Gas and Chubu Electric provides the strong end-user credit support necessary to fully finance the initial train of the liquefaction project.'
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.
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.
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.