The financing option via a shopping line is based on a loan granted by a commercial bank from Plasser & Theurer’s banking network as a lender to our foreign importer (borrower) to finance supply contracts with several Austrian exporters. In this way our customers can combine deliveries from several Austrian manufacturers in one loan and do not have to go through the time-consuming process of negotiating and concluding separate loans for different purchases. As a result they are given access to long-term and favourable financing terms such as competitive interest rates, long-term repayment periods, and high volumes.
Compared to a traditional buyer’s credit the shopping line is a much more flexible form of financing, as drawing on the loan does not have to be directly related to the deliveries under the supply contracts. Another advantage is that untied loans do not have to meet the OECD consensus, which means that up to 100% of the supply volume (a minimum of EUR 10 million) may be financed. The only requirement is a minimum of Austrian value creation.
Project phases
During the initiation phase of a project one of the banks from Plasser & Theurer’s network will express its interest in assuming the financing of at least two supply contracts with Austrian exporters by means of a letter of intent to the customer, and will state details regarding maximum volume, costs, term, collateral security, and the conditions to be fulfilled.
The supply contracts with the exporters need not be signed yet at the time the loan agreement is concluded. Defining potential future suppliers is sufficient and deliveries may even be financed that date back up to 24 months. Thus the loan agreement is not tied to a specific supply contract (untied), which offers the importer a certain degree of flexibility.
Costs and risk
The most significant cost item in such a loan agreement is the interest; either a floating (EURIBOR-based) or a fixed interest rate may be agreed on. Further, additional fees such as the margin of the bank issuing the buyer’s credit, the arrangement fee, and the commitment fee will be invoiced. In addition there is the ECA premium (this item depends on the OECD country risk classification and the customer’s creditworthiness). The specific terms of financing depend on the structure of the project and the creditworthiness of the parties to the agreement.
Risks related to the supply contracts and the loan agreement are covered by a guarantee issued by an Export Credit Agency (ECA) in the exporter’s country; the ECA in Austria is Oesterreichische Kontrollbank AG (OeKB). The guarantee is a prerequisite for realizing this type of financing.
Your benefits
- An attractive credit line for importers to finance fixed assets necessary for operation
- Flexible financing of future or past deliveries from Austrian exporters
- Financing solution based on attractive interest rates; either floating EURIBOR-based rates or fixed interest rates
- Securing financing even before final specification of the assets to be purchased
- Payment for Austrian products at a later date to improve the liquidity of the importer
- 100% financing of high supply volumes is possible
- Our seasoned specialists provide support and guidance during the entire financing process
Project example
A foreign construction company buys equipment for track construction, structural and civil engineering from Austrian exporters such as Plasser & Theurer, Liebherr and others. The drawing phase is six months and the repayment phase is eight years. The credit line is secured by a guarantee issued by Oesterreichische Kontrollbank.
