Alan Andrews Vice President, Global Trade, PNC Bank Banking in the United States for Turkish Investors – Financial Resources Available

Alan AndrewsVice President,

Global Trade, PNC Bank

Banking in the United States for Turkish

Investors – Financial Resources Available

PITTSBURGH STEELERS –SUPER BOWL CHAMPS!!2006

Tunç Ilkin

12 years with Pittsburgh Steelers

Pro Bowl Honors ‘88, ‘99

Who is

• 13th largest bank in the United States

• Established in 1860• Head Office located in

Pittsburgh, PA• Assets of US$93.2Bn

• Owns & operates banks in 8 states and the Washington D.C.

• Listed on the NYSE - PNC• www.pnc.com

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 (SME’s = Family Businesses)

• PNC ranks as 9th largest Small Business Lender in the USA

Who Are We?

SME’s = Family BusinessesSME’s = Family Businesses

• In the USA, SME’s comprise 97% of U.S. exporters• SME’s create 70% of new jobs in America• SME’s account for only small share of U.S. exports• SME’s desire to grow through exports

Untapped potential !

• 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 SME’s grow internationally.

In 2005, PNC largest user of U.S. Export-Import Bank programs.

Why Are We Here?Why Are We Here?

Why Are We Here?Why Are We Here?

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

Actual Case Study #1Actual Case Study #1

2005-20062005-2006

U.S. manufacturer of environmentally friendly U.S. manufacturer of environmentally friendly “supercritical fluid solution” systems“supercritical fluid solution” systems

4 Turkish SME’s in S4 Turkish SME’s in SÖÖKE form new company to invest KE form new company to invest in this new technology to extract oils from flax and in this new technology to extract oils from flax and herbs – US$1 millionherbs – US$1 million

5-year PNC financing5-year PNC financing

Unique and challenging structureUnique and challenging structure


2004-20052004-2005

U.S. manufacturer of plastics extrusion systemsU.S. manufacturer of plastics extrusion systems

Turkish SME in Izmir invests in this technology with Turkish SME in Izmir invests in this technology with PNC financing for 5 years to extrude plastic parts for PNC financing for 5 years to extrude plastic parts for automobiles – US$1.5 millionautomobiles – US$1.5 million

New $3mm investment planned for 2006-2007New $3mm investment planned for 2006-2007

Financing SolutionsFinancing Solutions

• Medium term financingMedium term financing – up to 7 years – up to 7 years

with U.S. Export-Import Bank supportwith U.S. Export-Import Bank support

The least expensive way to finance U.S. equipment The least expensive way to finance U.S. equipment purchasespurchases

Which Goods Can be Financed Medium-Term?Which Goods Can be Financed Medium-Term?

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

Borrower BenefitsBorrower BenefitsMedium Term FinancingMedium Term Financing

• Low interest rate – US$ LIBOR or Low interest rate – US$ LIBOR or € LIBOR base€ LIBOR baseAll-inAll-in annualized rate of 6.2%-8.5% p.a. annualized rate of 6.2%-8.5% p.a.

• Flexible TermsFlexible Terms

Payment terms of up to 7 years for end users Payment terms of up to 7 years for end users

No need for collateralNo need for collateral

No local bank guarantee or L/CNo local bank guarantee or L/C

Semi-annual repaymentsSemi-annual repayments

Grace period (up to 18 months)Grace period (up to 18 months)

Information RequiredInformation Required

• Last three years of financial statementsLast three years of financial statements• Financial information must be audited if request is US Financial information must be audited if request is US

$ 1 million or larger$ 1 million or larger• Project informationProject information• Business activities of borrowerBusiness activities of borrower• ““Good” credit referencesGood” credit references

OTHER U.S. Government supportOTHER U.S. Government support

• OPICOPIC

Targets US Joint venture in Turkey that may result in Targets US Joint venture in Turkey that may result in US exports; products mfgd can be exported back to US exports; products mfgd can be exported back to USUS

small business focussmall business focus

insurance, direct loansinsurance, direct loans

Banking in the U.S.??Banking in the U.S.??

Most US banks tried to have specialized groups Most US banks tried to have specialized groups (Foreign Direct Investment - FDI) internally covering (Foreign Direct Investment - FDI) internally covering all foreign investment But…all foreign investment But…

Too differentiated, too uniqueToo differentiated, too unique

Most now handle as normal course of their businessMost now handle as normal course of their business


Opening accountsOpening accountsA bit more than what we would require of a US co.A bit more than what we would require of a US co.Patriot Act validation (OFAC) & AML documentation – Patriot Act validation (OFAC) & AML documentation –

48-72 hour turnaround48-72 hour turnaroundBasic KYC: to ESTABLISH IDENTITY most important, Basic KYC: to ESTABLISH IDENTITY most important,

purpose of the account, source of funds (evidence)purpose of the account, source of funds (evidence)DEPENDS on Type of Entity, incl. Articles of DEPENDS on Type of Entity, incl. Articles of

incorporation; Partnership Agreement; official incorporation; Partnership Agreement; official documentation; Copy of By-Laws, Incumbency Cert.documentation; Copy of By-Laws, Incumbency Cert.(who officers are) Corp. Resolution(who officers are) Corp. Resolution

Tax Forms –Tax Forms – W-8W-8Turkish Bank or counsel REFERRAL helpsTurkish Bank or counsel REFERRAL helpsNo U.S. Address? (special circumstances –agents, No U.S. Address? (special circumstances –agents,

overseas lending), challengingoverseas lending), challenging


Opening accountsOpening accounts

Physically present self…again - KYC!Physically present self…again - KYC!

Probably no different that other OECD country Probably no different that other OECD country governmental requirementsgovernmental requirements


CREDITCREDIT

All types and sizes – depends on entity (business Life All types and sizes – depends on entity (business Life cycle) and needscycle) and needs

Secured, unsecured, Working Capital, equipment Secured, unsecured, Working Capital, equipment financing, leasing, real estate lendingfinancing, leasing, real estate lending

Business Credit Card, Business Insurance (property & Business Credit Card, Business Insurance (property & casualty, risk mgmnt svcs); Employee benefits (401k, casualty, risk mgmnt svcs); Employee benefits (401k, workplace bkg,etc.)workplace bkg,etc.)

Personal BkgPersonal Bkg - Checking & Savings, vehicle loans, - Checking & Savings, vehicle loans, credit cards, home mtgs.credit cards, home mtgs.

Investments – Brokerage Svcs, Stocks, Retirement Investments – Brokerage Svcs, Stocks, Retirement Planning, Savings plansPlanning, Savings plans


CREDITCREDIT

Controlled Block Agreement (also called Blocked Controlled Block Agreement (also called Blocked Account Agreement or Deposit Access and Control Account Agreement or Deposit Access and Control Agreement)Agreement)

33rdrd party or pvt lender (can be overseas bank) party or pvt lender (can be overseas bank)

Lender requires lockbox set up by PNC to control Lender requires lockbox set up by PNC to control sale proceeds – high cost, but availablesale proceeds – high cost, but available

oror

Turkish bank standby L/C with beneficiary being PNC to Turkish bank standby L/C with beneficiary being PNC to support local sales office borrowingssupport local sales office borrowings


Cash FlowCash Flow

The right type of checking accountsThe right type of checking accounts

The right type of money Mkt, and Business LOCThe right type of money Mkt, and Business LOC

Merchant ServicesMerchant Services

On-line money mgmnt servicesOn-line money mgmnt services

On-Line FX On-Line FX

On-Line Trade ServicesOn-Line Trade Services


Leveraging US Federal Gov’t Programs and State Leveraging US Federal Gov’t Programs and State assistance Programs – wide variety – for start-ups, assistance Programs – wide variety – for start-ups, commercial real-estate, equipment inventory and commercial real-estate, equipment inventory and working capitalworking capital

Typically less stringent requirements as to equity and Typically less stringent requirements as to equity and collateralcollateral

Lower down payments, and longer termsLower down payments, and longer terms

PNC Bank is an SBA preferred lenderPNC Bank is an SBA preferred lender


Relationships still importantRelationships still important

Find your CHAMPION!!Find your CHAMPION!!


2000-20062000-2006 Etimine USA, Inc. (sub of Eti Etimine USA, Inc. (sub of Eti Aluminyum)Aluminyum)

Importer of boron, chemicals and ferrochrome for steel Importer of boron, chemicals and ferrochrome for steel industry in U.S., 5 direct employees, approx $20mm industry in U.S., 5 direct employees, approx $20mm sales currentlysales currently

Has substantial deposit accounts at PNC, currently no Has substantial deposit accounts at PNC, currently no borrowing (industry doing very well now, has borrowing (industry doing very well now, has borrowed in past, small amounts <$100k, borrowed in past, small amounts <$100k, unsecured), originally wanted $500k LOC “because it unsecured), originally wanted $500k LOC “because it is largest aluminum co in Turkey” …(it doesn’t work is largest aluminum co in Turkey” …(it doesn’t work this way)this way)


1999-20061999-2006 U.S. Electro-Fused Metals LLCU.S. Electro-Fused Metals LLC

Brazilian mfr of metal coatings ($12mm in sales in BZ)Brazilian mfr of metal coatings ($12mm in sales in BZ)

11stst met w/Real Estate Development Fund, intro’d to PNC met w/Real Estate Development Fund, intro’d to PNC lender, who reached out to PA Dev Authority, recvd lender, who reached out to PA Dev Authority, recvd $3.4mm 15 year plant loan jointly w/PNC, workig cap $3.4mm 15 year plant loan jointly w/PNC, workig cap of $1.5mm, on line bk svcs, personal bkg, now US of $1.5mm, on line bk svcs, personal bkg, now US has $20mm in sales and is largest revnue generator has $20mm in sales and is largest revnue generator of groupof group

No personal gtees, no parent gtee – all domestic liensNo personal gtees, no parent gtee – all domestic liens

WIN-WIN situationWIN-WIN situation


2005-20062005-2006 LEEDS INC.LEEDS INC.

$12mm-in-sales U.S. importer/distributor of promotional $12mm-in-sales U.S. importer/distributor of promotional items, bought by large French firm; PNC taken out of items, bought by large French firm; PNC taken out of credit by aggressive European lendercredit by aggressive European lender

Co found borrowing from Euro bank too cumbersomeCo found borrowing from Euro bank too cumbersome

PNC structured $10mm LOC secured PNC structured $10mm LOC secured onlyonly by A/R by A/R

Lockbox, purchasing card, merchant svcsLockbox, purchasing card, merchant svcs

Canada lockbox for Canada salesCanada lockbox for Canada sales

Unique and challenging structureUnique and challenging structure


1986-20061986-2006 PROMINENT FLUIDS, INC.PROMINENT FLUIDS, INC.German owned mfgr of pumps; 20-year relationship with German owned mfgr of pumps; 20-year relationship with

PNC. Originally we financed plant development with PNC. Originally we financed plant development with PA state assistance, and parent gtee.PA state assistance, and parent gtee.

Now, $3mm LOC extended against inventory and A/R, Now, $3mm LOC extended against inventory and A/R, large FX dealings, all Treasury management Services large FX dealings, all Treasury management Services on-line…no personal or corp gtees but does have a on-line…no personal or corp gtees but does have a subordination agreement of parents credit to US subordination agreement of parents credit to US companycompany

Contact

Alan D. AndrewsVice President and Manager Global Trade

PNC Bank, N.A.

Two PNC Plaza

Pittsburgh, PA 15222

412. 768. 7662 office

412. 762. 5022 fax

[email protected]

www.pnc.com/tradefinance

Documents

Alan Andrews Vice President, Global Trade, PNC Bank Banking in the United States for Turkish Investors – Financial Resources Available