Department of Transportation Maritime Administration

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Maritime Administration
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Title XI Financing
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Ship Financing ProgramTitle XI
OVERVIEW OF PROGRAM

• Provides a U.S. government guarantee of private
  sector debt financing
• For vessels constructed in the U.S.
• Modernization of U.S. shipyard facilities

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Benefits of the Program

• Up to 87 1/2 percent financing
• Longer term maturities - Up to 25 years
• Fixed or floating rates permitted
• Attractive interest rates

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Financial Requirements

• Minimum of 12 1/2 equity must be funded or
  committed prior to any approval from MARAD
• Positive working capital
• Long-term debt to equity ratio cannot exceed 21
• Maintain net worth

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Program Funding

• Appropriated funds required for risk factor
• 5 average risk factor
• 10 million leverages into 200 million
• Defaults paid out of funds set aside

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Informational Materials

• Brochure
• Application form
• Program regulations
• Primary financing agreement
• Closing documents

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Websites
General Information

• www.marad.dot.gov

Application form/closing documents

• www.marad.dot.gov/title_xi

Regulations

• www.marad.dot.gov/title_xi/title_xi_info.html

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Pre-application Meeting

• Information should be supplied prior to meeting
• General business plan or executive summary
• Brief history of company
• Number and type of vessels involved
• Area of operation
• Anticipated cost
• Shipyard

• Additional information
• Financial statements
• Economic projections
• Technical data

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Fees
Filing Fee

• 5,000 (credited against the investigation fee)

Investigation Fee

• 1/2 of 1 of first 10 million
• 1/8 of 1 in excess of 10 million

Guarantee Fee

• 1/2 to 1 of average amount outstanding
  obligations
• Fee determined based on borrowers financial
  condition
• Due at initial closing
• Fee can be financed

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Application Information
Financial

• Audited financial statements for the last three
  years
• Pro-forma financials as of a projected closing
  with Title XI financing
• Projected financial statements for the next five
  years
• The source and timing of the projects funding
• Capital structure and ownership structure

Economics

• Market Description
• Projections of revenues and expenses
• Rate and utilization assumptions

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Application Information (cont.)
Operational

• Experience
• Costs

Technical

• Plans and specifications
• Cost justification

Contracts

• Shipyard
• Employment
• Ownership
• Management / Operation

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Final Steps

• Letter Commitment issued
• Documents submitted
• Obligations marketed
• Closing

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Capital Construction Fund

• Tax deferral for shipping income, e.g., IRA
• Tax - deferred funds used for new vessel
  construction
• Taxes recouped through reduction in depreciable
  basis