Alan Andrews

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Alan Andrews Vice President, Global Trade, PNC
Bank
Banking in the United States for Turkish
Investors Financial Resources Available
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PITTSBURGH STEELERS SUPER BOWL CHAMPS!!2006
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Tunç Ilkin
12 years with Pittsburgh Steelers
Pro Bowl Honors 88, 99
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Who is

• 13th largest bank in the United States
• Established in 1860
• Head Office located in Pittsburgh, PA
• Assets of US93.2Bn
• Owns operates banks in 8 states and the
  Washington D.C.
• Listed on the NYSE - PNC
• www.pnc.com

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Who is

• Finance companies from start-up to 5 billion in
  revenue
• ATMs 3,600
• Total staff More than 23,000 in 27 U.S. states
  and overseas locations
• Customers 2.9 million consumer and Small and
  Medium Sized Enterprises (SMEs Family
  Businesses)
• PNC ranks as 9th largest Small Business Lender in
  the USA

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Who Are We?
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SMEs Family Businesses

• In the USA, SMEs comprise 97 of U.S. exporters
• SMEs create 70 of new jobs in America
• SMEs account for only small share of U.S.
  exports
• SMEs desire to grow through exports
• Untapped potential !

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Why Are We Here?

• PNC has increased its resources and services that
  specialize in international banking, evidenced
  by
• In 2005, PNC awarded the Presidential E Award.
• In 2005, PNC selected by the U.S. Department
  of Commerce as first financial partner to help
  SMEs grow internationally.
• In 2005, PNC largest user of U.S. Export-Import
  Bank programs.

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Why Are We Here?

• Provide attractive financing to Turkish SMEs
  that are investing in U.S. SME produced capital
  goods and services

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Actual Case Study 1

• 2005-2006
• U.S. manufacturer of environmentally friendly
  supercritical fluid solution systems
• 4 Turkish SMEs in SÖKE form new company to
  invest in this new technology to extract oils
  from flax and herbs US1 million
• 5-year PNC financing
• Unique and challenging structure

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Actual Case Study 2

• 2004-2005
• U.S. manufacturer of plastics extrusion systems
• Turkish SME in Izmir invests in this technology
  with PNC financing for 5 years to extrude plastic
  parts for automobiles US1.5 million
• New 3mm investment planned for 2006-2007

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Financing Solutions

• Medium term financing up to 7 years
• with U.S. Export-Import Bank support
• The least expensive way to finance U.S.
  equipment purchases

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Which Goods Can be Financed Medium-Term?

• Machines and equipment - new or used
• Services that can be capitalized

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Borrower BenefitsMedium Term Financing

• Low interest rate US LIBOR or LIBOR
  baseAll-in annualized rate of 6.2-8.5 p.a.
• Flexible Terms
• Payment terms of up to 7 years for end users
• No need for collateral
• No local bank guarantee or L/C
• Semi-annual repayments
• Grace period (up to 18 months)

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Information Required

• Last three years of financial statements
• Financial information must be audited if request
  is US 1 million or larger
• Project information
• Business activities of borrower
• Good credit references

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OTHER U.S. Government support

• OPIC
• Targets US Joint venture in Turkey that may
  result in US exports products mfgd can be
  exported back to US
• small business focus
• insurance, direct loans

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Banking in the U.S.??

• Most US banks tried to have specialized groups
  (Foreign Direct Investment - FDI) internally
  covering all foreign investment But
• Too differentiated, too unique
• Most now handle as normal course of their business

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Banking in the U.S.??

• Opening accounts
• A bit more than what we would require of a US co.
• Patriot Act validation (OFAC) AML documentation
  48-72 hour turnaround
• Basic KYC to ESTABLISH IDENTITY most important,
  purpose of the account, source of funds
  (evidence)
• DEPENDS on Type of Entity, incl. Articles of
  incorporation Partnership Agreement official
  documentation Copy of By-Laws, Incumbency
  Cert.(who officers are) Corp. Resolution
• Tax Forms W-8
• Turkish Bank or counsel REFERRAL helps
• No U.S. Address? (special circumstances agents,
  overseas lending), challenging

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Banking in the U.S.??

• Opening accounts
• Physically present selfagain - KYC!
• Probably no different that other OECD country
  governmental requirements

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Banking in the U.S.??

• CREDIT
• All types and sizes depends on entity (business
  Life cycle) and needs
• Secured, unsecured, Working Capital, equipment
  financing, leasing, real estate lending
• Business Credit Card, Business Insurance
  (property casualty, risk mgmnt svcs) Employee
  benefits (401k, workplace bkg,etc.)
• Personal Bkg - Checking Savings, vehicle loans,
  credit cards, home mtgs.
• Investments Brokerage Svcs, Stocks, Retirement
  Planning, Savings plans

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Banking in the U.S.??

• CREDIT
• Controlled Block Agreement (also called Blocked
  Account Agreement or Deposit Access and Control
  Agreement)
• 3rd party or pvt lender (can be overseas bank)
• Lender requires lockbox set up by PNC to control
  sale proceeds high cost, but available
• or
• Turkish bank standby L/C with beneficiary being
  PNC to support local sales office borrowings

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Banking in the U.S.??

• Cash Flow
• The right type of checking accounts
• The right type of money Mkt, and Business LOC
• Merchant Services
• On-line money mgmnt services
• On-Line FX
• On-Line Trade Services

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Banking in the U.S.??

• Leveraging US Federal Govt Programs and State
  assistance Programs wide variety for
  start-ups, commercial real-estate, equipment
  inventory and working capital
• Typically less stringent requirements as to
  equity and collateral
• Lower down payments, and longer terms
• PNC Bank is an SBA preferred lender

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Banking in the U.S.??

• Relationships still important
• Find your CHAMPION!!

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Actual Case Study 1

• 2000-2006 Etimine USA, Inc. (sub of Eti
  Aluminyum)
• Importer of boron, chemicals and ferrochrome for
  steel industry in U.S., 5 direct employees,
  approx 20mm sales currently
• Has substantial deposit accounts at PNC,
  currently no borrowing (industry doing very well
  now, has borrowed in past, small amounts unsecured), originally wanted 500k LOC because
  it is largest aluminum co in Turkey (it doesnt
  work this way)

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Actual Case Study 2

• 1999-2006 U.S. Electro-Fused Metals LLC
• Brazilian mfr of metal coatings (12mm in sales
  in BZ)
• 1st met w/Real Estate Development Fund, introd
  to PNC lender, who reached out to PA Dev
  Authority, recvd 3.4mm 15 year plant loan
  jointly w/PNC, workig cap of 1.5mm, on line bk
  svcs, personal bkg, now US has 20mm in sales and
  is largest revnue generator of group
• No personal gtees, no parent gtee all domestic
  liens
• WIN-WIN situation

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Actual Case Study 3

• 2005-2006 LEEDS INC.
• 12mm-in-sales U.S. importer/distributor of
  promotional items, bought by large French firm
  PNC taken out of credit by aggressive European
  lender
• Co found borrowing from Euro bank too cumbersome
• PNC structured 10mm LOC secured only by A/R
• Lockbox, purchasing card, merchant svcs
• Canada lockbox for Canada sales
• Unique and challenging structure

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Actual Case Study 4

• 1986-2006 PROMINENT FLUIDS, INC.
• German owned mfgr of pumps 20-year relationship
  with PNC. Originally we financed plant
  development with PA state assistance, and parent
  gtee.
• Now, 3mm LOC extended against inventory and A/R,
  large FX dealings, all Treasury management
  Services on-lineno personal or corp gtees but
  does have a subordination agreement of parents
  credit to US company

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Contact

• Alan D. Andrews
• Vice President and Manager Global Trade
• PNC Bank, N.A.
• Two PNC Plaza
• Pittsburgh, PA 15222
• 412. 768. 7662 office
• 412. 762. 5022 fax
• alan.andrews_at_pncbank.com
• www.pnc.com/tradefinance