COVID-19: Finance Update - OeKB Export-Financing Support
03/26/2020 - Reading time: 6 minutes
In light of the current COVID-19-pendemy and the challenging situation linked with such development for all companies, the Republic of Austria is providing via the Federal Ministry of Finance to exporters a credit line of 2 billion Euros. The Austrian Control Bank (Oesterreichische Kontrollbank AG – OeKB) is responsible for processing such financial aid, while the application is to be submitted via the company’s (principal) bank. fwp outlines the key points of this support measure.
The group of companies targeted by this support measure comprises exporters, both large companies and SMEs, whose goods and services are not covered by the Security Control Act (Sicherheitskontrollgesetz) and/or the War Material Ordinance (Kriegsmaterialverordnung) and generally have an Austrian added value for Austria of at least 25%.
This form export support is provided through bills of exchange guarantee commitments (Wechselbürgschaftszusagen) by OeKB, both for new and existing financings (refered to by OeKB as “Special KRR”). Depending on the company’s credit rating, the Republic of Austria assumes the risk of default for up to 50 to 70 percent of the credit line. The Special KRR can also be applied for in addition to existing financings with OeKB (OeKB KRR or export fund credits).
One prerequisite for the taking up of the Special KRR is that the company was “healthy” before the outbreak of the COVID-19 crisis, whereby OeKB uses the balance sheet as of the last balance sheet date or, if more adequate, a provisional balance sheet as reference for determining the status. OeKB does not use the key figures of the Austrian Entrepreneurs Reorganization Act (Unternehmensreorganisationsgesetz) to assess whether a company was healthy before the outbreak of the COVID-19 crisis but applies its own rating procedure. In individual cases, even if the rating threshold relevant for taking up of the Special KRR is not reached, taking up of the Special KRR is not completely excluded if additional collateral is provided (e.g. in a group of companies through corresponding guarantees from shareholders).
OeKB’s export support is limited to 10 percent for large companies and 15 percent for SMEs of the export turnover in the previous financial year. The maximum absolute limit of 60 million Euro per group of companies applies to individual loans. An existing KRR can also be increased with OeKB’s export support if, at the time of the increase, provided there are sufficient financing requirements for export orders and export receivables, there are sufficient third-party receivables as collateral and these receivables will still be available in the future (for a new Special KRR this proof of a specific financing requirement in the form of existing export orders or export receivables is not required).
The Special KRR can also be applied for receivables sold as part of factoring. OeKB has also confirmed that the Special CRR can be allocated among several banks, which is of particular relevance in syndicated financing situations.
The framework credit granted in conjunction with the Special KRR must actually be used against the background that unused frames would deprive other companies of the possibility of support through this form export support. OeKB reserves the right to adjust or terminate the special credit line on a quarterly basis depending on the actual utilization (first adjustments or terminations are scheduled currently for the first time as of 30 September 2020).
Further key data for the Special KRR is as follows:
|Surety Fee (Wechselbürg-schaftsentgelt)||0.3 percent per annum of the utilized amount to the extent the bank bears the insolvency risk and 0.6 percent per annum for the portion of the loan where the Republic of Austria bears the insolvency risk.|
|Proceessing Fee||On time fee in the amount of 0.1 percent of the applied credit, minimum 10 Euros and maximum 720 Euros.|
|Interest on Financing||The financing is made via the OeKB refinancing frame (Kontrollbank-Refinanzierungsrahmen) based on the current interest rate (currently 0.5 percent per annum).|
|Collateral||OeKB has not made clear statements in this respect; the conditions of the assumption of liability are determined on a case-by-case basis (as a rule, a pro-rata participation in the collateral for the loan will likely takes place).|
|Term||two years (with a limited posibility / option for prolongation)|
|possible; no breakage costs will be applied by OeKB|
The fincance experts of fwp will be pleased to provide any advise in relation to new and existing credit-lines, including any questions related to the restructuing of financings.
Checklist for Application and Process
|Contact with the (principal) bank (in the case of existing financing arrangements, including in particular syndicated financings, compliance with the notification requirements must be ensured; cross default regulations, prohibitions on further indebtedness and other provisions in financing agreements and other contractual relationships must be checked for any potential negative effects)||O|
|Submission of documents to the (principal) bank:|
- Annual accounts for the previous financial year (if not availa-ble, eventually preliminary draft annual accounts)
- accounts / key figures for the current financial year
- bank liabilities overview (to the extent OeKB has not been already submitted an overview with figures no older than 31 December 2019)
- brief description of the company including a description of the situation (in particular why a bottleneck is suspected and which effects will arise therefrom, whether the company has applied or will apply for short-time work, etc)
|the (principal) bank completes the form application provided by OeKB (KRR-Formular) with the anotation „COVID-19-Support“ and provides the OeKB with such form and the submitted documents||O|
|review of the application by OeKB and submission to the OeKB advisory board for approval||O|
|following positive approval,|
- the (principal) bank obtains the confirmation from OeKB and secures the funds from the OeKB refinancing frame; and
- the company receives a bill of exchange from the bank for the requested financing period, which has to be accept by the company and which is guaranteed by the Federal Ministry of Finance.