Outline of DBJ Financial Services ～ Promoting Foreign Direct Investment in Japan～ Kazuhiko Shioyama Chief Representative Office in London DEVELOPMENT BANK OF JAPAN 28/11/2002
Overview of DBJ _ _ 100% owned by the Japanese Government Carrying out effective policy-based financing Long-term, fixed-rate, low-interest loan _ Providing value-adding services Japanese market information, project structuring, M&A matchmaking and advisory services _ Total assets US$130. 0 billion as of March 2002 (17. 3 trillion yen) _ Ratings for DBJ International Bonds ‘AA-’(Standard & Poor’s), ‘Aa 1’ (Moody’s) 2
DBJ loan programs foreign-affiliated companies _ _ _ Established in 1984 Supporting foreign companies penetrating the Japanese market Accumulated financing to foreign-affiliated companies: 777 loans totaling US$6. 3 billion (769 billion yen) 3
Target projects _ Capital investment conducted in Japan. Construction of factories, R&D centers, office buildings and equipment, distribution centers, warehouses, purchase of land for above-mentioned facilities etc. _ Merger and acquisitions with Japanese companies _ Research and development costs in Japan _ Rent deposits required of tenants 4
Conditions (1) _ Interest rate The interest rate is fixed at the timing of disbursement basically. The rate is determined in accordance with the term, grace period and the security for the loan. The creditworthiness of the borrower is also considered. _ Term and grace period Loan term and grace period is set according to the cash-flow needs of the project. Loan term usually ranges from 10 to 15 years and grace period from 1 to 3 years. _ Loan Amount Maximum 50% of the total project cost. Co-finance with commercial banks is basically required. 5
Conditions (2) _ Securities Collateral is required in principle. A guarantor(e. g. parent company) may be required if considered to be necessary. In case financial covenants may be provided. _ Payment The repayment method is by equal installment with deferred payment of interest at fixed rates in principle. _ Interest Period Pay in arrear on outstanding balance, Expected to be paid quarterly _ Prepayment Possible with a penalty equal to the NPV( Net Present Value) of the reinvestment cost to the maturity of the loan. 6
DBJ Guarantee Program for Commercial Banks DBJ Also Offers Guarantees On Commercial Bank Loans To Supplement New Entrants’ Credit • • Amount – Max. 80% of borrowing related to project, in principle – Available either independently or together with a DBJ loan (combined upper limit of 80%) Guarantee Fee – 0. 3% per annum of outstanding balance 7
Examples of DBJ’s Corporate Financing for Overseas 1. Semiconductor & High-Tech fields - Applied Materials, International Rectifier, Lam Research, Tylan General, Silicon Valley Group Inc. , LSI Logic, Motorola, Corning Incorporated, Tycom Corporation, IBM, Raychem, Tyco International, Nanometorics , Sequent Computer, Interlink Electronics, MEMC Electronic Materials Inc. , Siward Crystal Technology, Samsung, Micron Technology 2. Automobile Industry - Raymond, Inergy Automotive Systems, Volkswagen, BMW, Robert Bosch, General Motors, Ford, Spraying Systems, Escalator Handrail, General Electric, AMP, SEW, Stihl, Hyundai, Pohang Steel, Evergreen Marine, Siderca S. A. I. C. 8
Examples of DBJ’s Corporate Financing for overseas 3. Chemical & Pharmaceutical factories - Swedeponic, Solvay, UCB, Bayer, Fresenius, Roche, Eli Lilly, Advanced Ceramics, Rohm and Haas, R. P. Scherer, Chevron, Du Pont, Proctor & Gamble, Boston Scientific Corporation, BASF, Degussa-Hüls, Novartis, 4. Telecommunications - Fidelity Management Research 5. Retail - Carrefour, Virgin Entertainment , Toys”R”Us, Starbucks Coffee, L. L. Bean, Nike Inc. , Pier 1 Import, Triumph 6. Real Estate - Alderney Investments, Pacific Century Group 9
The Progress of M&A in Japan _ Recently the number of M&As by foreign companies is increasing year by year. In 1996 In 1997 In 1998 In 1999 In 2000 In 2001 31 51 85 129 175 158 10
Advantage of DBJ’s Programs for M&As Special emphasis on mid-sized transactions, a segment transactions given low priority in M&A services by commercial investment banks _ Long-term, fixed-interest and lengthy grace”take-out financing”, complimentary to commercial banks loan and good source to reduce the capital burden for the work-out stages of the project _ Sell / Buy side Advisory (with fee base) Target Screening, Transaction Execution, etc. _ Value-adding Matchmaking _ 11
Characteristics of DBJ Matchmaking _ Broad network throughout industry, including over 4, 000 customers in Japan and abroad (extended over 700 loans for FDI into Japan) _ Close Relationships with over 60 regional banks possessing valuable information on the firms within their territory _ Close relationships with major law offices and accounting firms which take charge of legal counseling and due diligence 12
Recent cross-border transactions M&A advisory and acquisition financing – Micron Technology (U. S. A. ) • Advised, structured and provided debt finance in relation to the acquisition of the remaining 75% share of KMT Semiconductor from Kobe Steel – Siward Crystal Technology (Taiwan) • Advised and provided debt finance for the acquisition of Meidensha’s quartz crystal business – Siderca S. A. I. C. (Argentine) • Advised and provided debt finance in connection with the transfer of the seamless pipe business of NKK (Japan’s second largest steel maker) 13
DBJ’s Network TOKYO HEAD OFFICE 9 -1 Otemachi 1 -chome Chiyoda-ku, Tokyo 100 -0004 Japan Phone: 81 -(0)3 -3244 -1770 Fax: 81 -(0)3 -3245 -1938 http: //www. dbj. go. jp LONDON REPRESENTATIVE OFFICE Level 12, City Tower 40 Basinghall Street London EC 2 V 5 DE UK Phone: 44 -(0)20 -7638 -6210 Fax: 44 -(0)20 -7638 -6467 E-mail: hendy@dbjuk. info OTHER REPRESENTATIVE OFFICES Washington D. C. Phone: 1 -202 -331 -8696 Fax: 1 -202 -293 -3932 New York Phone: 1 -212 -221 -0708 Fax: 1 -212 -221 -6138 Los Angeles Phone: 1 -213 -362 -2980 Fax: 1 -213 -362 -2982 Frankfurt Phone: 49 -(0)69 -7191760 Fax: 49 -(0)69 -71917615 Singapore Phone: 65 -2211779 Fax: 65 -2211142 14
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