ANNOUNCEMENT 29 Sep 2010In September 2010, 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 of 30 September 2010: Project Financing and Political Risk Guarantee for Acquiring Portfolio of Power Assets in Mexico: http://www.jbic.go.jp/en/information/press/press-2010/0930-7269
Mitsui press release of 24 December 2009: Purchase of natural-gas-fired power stations in Mexico: http://www.mitsui.com/jp/en/release/2009/1205290_6468.html
JBIC information on overseas investment loans: http://www.jbic.go.jp/en/finance/investment
On 29 September 2010, the Japan Bank for International Cooperation (JBIC) signed an overseas investment loan agreement totalling a maximum USD 750 million with Mexican MT Falcon Holdings Company, S.A.P.I. de C.V. in project financing. The Mexican company is a holding company owned by the Japanese companies Mitsui & Co., Ltd. (70%) and Tokyo Gas Co., Ltd. (30%). Additionally, a number of Japanese commercial banks have co-financed the loan with JBIC providing a political risk guarantee for this co-financed portion.
The loan finances the acquisition of power assets from the Spanish company Gas Natural as well as its long-term maintenance and operation. Notably this is a portfolio-orientated project aiming at purchasing additional assets in the power generation industry in Mexico.
In this context the Bank stated: '... that this loan and guarantee will help Japanese firms promote their participation in infrastructure projects, including power generation projects and the acquisition of interests in independent power producers (ed. IPP) projects.'
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.