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» Products and Services	» Export Finance Unit

» General Credit Unit	» Structured Finance Unit

» Lease Finance Unit	» Prerequisites for a Business Loan

Structured Finance Unit

Prime Bank offers customized, friendly, and flexible financial solutions to customers and strives to ensure financing package in a cost-effective manner.

Structured Finance Unit deals with project financing and covers virtually every sector of the economy with a focus on infrastructure projects, project finance, acquisition finance, securitization, and advisory services.

Products & Services:

Project Finance

Project Finance is a long-term credit arrangement with a debtor related to the development and construction of infrastructure or a large commercial or industrial project. The technique involves mobilization of debt, equity, contingent equity, hedges and a variety of limited guarantees through a newly organized company, partnership or contractual joint venture, often referred to as Special Purpose Vehicle ("SPV"), for the purpose of building a capital intensive facility and operating a discrete business activity.

Project Finance is a limited- or non-recourse transaction characterized by:

	Lumpy capital investment;

	Debt service tailored to cash flow

	Preponderance of credit enhancements

	Extensive due diligence

	Involvement of several parties including sovereign entity and

	Lengthy documentation and negotiation period

Prime Bank finances both Greenfield, existing, as well as Balancing-Modernizing-Rehabilitation-Expansion Program ("BMRE") projects taking three approaches:

A.	SOLE FINANCE

	The Bank is the only financier to the project.

B.	CO-FINANCE

	The Bank collaborates and complements other lenders to complete the debt package of a project.

C.	SYNDICATION

	"Syndicated Loan"as loans extended by multiple banks where the overall credit involved exceeds an individual lender’s legal lending or other limits. It is made available by a group of FIs in pre-defined proportions under the same credit facility following common loan documentation formalities. It is different from co- or, club-financing (where many banks finance a single borrower) in terms of deal origination, mechanism, documentation, disbursement, monitoring, management, etc. Essential characteristics include (i) single borrower, (ii) more than one lender, (iii) common loan & security documentation.

Acquisition Finance

It includes finance facilities for merger and acquisition of different business units, entities and bodies. The Bank has the ability to offer financial and advisory services for companies attempting to create synergy through Merger, Acquisitions or Consolidation. The Bank help sponsors/acquirers/targets firms in their search for right counterparties and conduct valuation of the targeted company with the objective of making the transaction profitable and adding economic values.

Securitization

Securitization is the financing or re-financing of income yielding assets by packaging them into a tradable form through an issue of bonds or other securities.

Parties involved in securitization :

	Originator: the entity that wants to sell the cash flows.

	Trust: the legal vehicle where the cash flow are deposited completely separate from the Originator.

	Servicer: The entity which is responsible for collecting all cash flows which are due to the trust.

	Investors: The investors are the entities that subscribe to the bonds that are issued against the underlying cash flows.

Advisory

Structured Finance Unit provides following advisory services for project sponsors/entrepreneurs:

	Reviewing preliminary/rudimentary business plan/concept note prepared by project sponsors;

	Conducting market review/research report for the project;

	Drawing full-fledged, sound business/investment plans for the proposed project;

	Devising an optimal financial structure/package for the proposed project;

	Assisting project sponsor(s) in securing onshore and offshore finance;

	Joining project sponsor(s) in loan negotiation and documentation.

	Structuring / designing financial model(s) for project(s).

Investment Criteria and Parameters:

Criteria

In evaluating an investment request, the project itself is looked at initially. Important criteria for lending would include following aspects, among others:

	commercial viability;

	a sound business plan;

	a thorough appraisal report incorporating legal, technical, marketing, financial and environmental aspects

	proven and established operational, financial and governance track record, experience and expertise of the sponsors;

Parameters

	Transaction Size: Preferably not below Taka 50.0 million;

	Tenor: commensurate with project requirements but not exceeding 15 years including a grace period not exceeding 4 years;

	Debt-to-equity: Not exceeding 80:20. However, in case of syndication, Prime Bank’s exposure shall not exceed 50% of total debt package;

	Interest Rate: Either fixed or variable rate as per customer’s will, reflecting current market conditions; presently, capped at 13% pa;

	Fees and charges: most competitive in the market.

Financing mode

	Project Loan including

	-	Term loan with amortizing, accreting, balloon, bullet, or, customized repayment schedule

	-	Lease financing repayable through monthly rentals

	-	Sale & lease back

	Bridge financing to assist the customer meet interim funding requirements, usually for less than six (6) months, and repayable in form of bullet shot out of the proceeds of long-term project loan

	Refinancing of existing liabilities

	Working capital finance, i.e. revolving cash credit facilities

Currency of lending

The Bank has ability to lend in both local and foreign currency.

Till 2009, the Bank arranged and disbursed fund in local currency. However, recently, there existed a strong demand for off-shore financing usually carrying a much lower interest rate and longer tenor, as compared to that of local currency financing, specially from the sponsors of project/companies with revenues pegged in USD/Euro, and sponsors preparing to submit bid for large power projects, i.e. capacity exceeding 100MW.

In 2010, the Bank disbursed a USD 15 million project financing facility to a local uPVC manufacturing facility, and another USD 5 million to the national airline carrier under a syndicated transaction.

Access to specialized fund and multilateral/development financial institutions

The Bank does have an access to a USD 250 million infrastructure fund under Investment Promotion Financing Facility ("IPFF"), managed by Bangladesh Bank, and endowed jointly by the World Bank and Govt. of Bangladesh ("GoB"). The Bank can also tie up with Infrastructure Development Company (www.idcol.org), a non-bank financial institution created by GoB and International Development Association ("IDA") for arranging offshore currency project financing.

Besides, the Bank has excellent working and networking relationship with FMO, DEG and other multilateral/development financial institutions for co-financing and arranging offshore finance, should a project pass the lending norms.

	Prime Bank Celebrates Decade of Loan Syndications

	Project Finance and Loan Syndication Procedures

	Speech by Dr. Atiur Rahman, Governor, BB, on PBL Decade of Loan Syndication dt 18 Apr 10

Contact Details:

STRUCTURED FINANCE Department (SFD)

Corporate Banking Division, Head Office, Prime Bank Limited
119-120 Motijheel Commercial Area, Dhaka 1000
Tel: +880-2-9565439, +880-2-7116888
PABX: +880-2-9567265 (Ext. 277, 310,382,280),
Fax: +880-2-9565439
Group E-mail: structured.finance@primebank.com.bd; structured_finance@yahoogroups.com

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