# Presentation: 411768

## Overview of the Overseas Private Investment Corporation (“OPIC”)

***April 27, 2006***

## Mission Statement

**Public Ownership:** Overseas Private Investment Corporation (OPIC) is a self sustaining U.S. government corporation. OPIC’s obligations are backed by the full faith and credit of the US government.
**Activity:** Public investment insurance agency. OPIC is not an export credit agency; therefore its programs are not tied to the export of US goods.
**Geographic cover:** OPIC is involved in 150 countries.
**Self-Sustaining:** Recorded a net income of $163 million in 2004 with reserves greater than $5.9 billion.

***“******OPIC's mission is to mobilize and facilitate the participation of United States private capital and skills in the economic and social development of less developed countries and areas, and countries in transition from non-market to market economies. In accomplishing its mission, OPIC will promote positive U.S. effects and host country developmental effects. OPIC will assure that the projects it supports are consistent with sound environmental and worker rights standards. In conducting its programs, OPIC will also take into account guidance from the Administration and Congress on a country’s observance of, and respect for, human rights. In accomplishing its mission, OPIC will operate on a self-sustaining basis.”***

## OPIC Overview 

**OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. **

- Over the agency’s 30-year history, OPIC has supported US$ 164 billion worth of investments that have helped developing countries generate over US$13 billion in host-government revenues and created more than 732,000 host-country jobs.
- OPIC’s Political Risk Insurance and financing helps mobilize and facilitate the participation of U.S. private capital in the economic and social development of transitional economies by assisting U.S. Investors (including eligible U.S. financial institutions) through four principal activities designed to promote overseas investment and reduce the associated risks:
- Insuring investments overseas against a broad range of political risks
- Financing businesses overseas through loans and loan guarantees
- Financing private investment funds that provide equity to businesses overseas
- Advocating the interests of the American business community overseas

## OPIC Developmental Initiatives

**U.S. Private Investment in Key Sectors**

- OPIC solutions implemented to support private investment in more than 150 developing and emerging market countries worldwide
- Focus on supporting United States small businesses
- Sector focus on oil & gas, power, housing, consumer,  and infrastructure

**Small and Medium Sized Enterprises**

- Support for SME and Middle Market clients investing internationally
- OPIC support enhances commercial banks’ ability to lend to these entities via risk-sharing facilities
- OPIC support for small businesses is dedicated to sustainable profitable growth

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## Financing Structures: OPIC Finance vs. OPIC PRI

- Comprehensive OPIC guarantee for both commercial and political risks

- Political Risk only

**OPIC Finance**

**OPIC PRI**

**Eligibility**

**Benefits**

**Type of Cover**

- US investor clean exposure of at least 25%

- US lenders of at least 25%

- Mitigation of cross-border risk
- Parent guarantee only called in commercial event
- Protection against expropriation and political violence

- No use of bank lines for sponsor
- Recourse to parent not necessarily required by OPIC
- Financing can be on a project-finance or a corporate-finance basis, or a hybrid thereof

- Comprehensive cover can be more costly than PRI

- Parent guarantee required; parent bank lines utilized

**Considerations**

## Benefits of an OPIC supported structure

**Mitigation of Cross Border Risk**
**D****iversification of funding base**
**Longer tenor than available in bank or capital markets**
**Competitive Cost of Financing**
**Execution Experience**

## Citigroup and OPIC Collaboration in 2005/2006

| Transaction | Amount / Contact | Project description / Citigroup’s role |
| --- | --- | --- |
|  | $70 million
 | A $70 million one-year revolving facility, coordinated by Citigroup, to guarantee L/C issuance by TBI to foreign exporters involved in reconstruction projects.  Specifically, a trust will issue financial guaranties to commercial banks that have confirmed letters of credit issued by TBI.  This facility has been structured on a first loss/second loss basis, where OPIC assumes 75% and the Risk Participants assume 25% of monthly L/Cs not paid by TBI.  |
|  | $212 million | US$ 212 MM financing to ISAGEN utilizing OPIC’s Non Honoring of Sovereign Guarantee insurance that is supported by a 100% sovereign guarantee of the government of Colombia.  Proceeds will be used for power generation projects and improvements in current energy generation assets. |
|  | $250 million
 | US$ 250 MM financing to the Israel Electric Corporation, comprehensively insured by OPIC under the Sovereign Non Honoring ("SNH") program. Proceeds are being used to build the first phase of a natural gas pipeline network that will eventually cover all of Israel. |
|  | $200 million
 | Citigroup is the financial adviser for the financing of the Hamma Water Desalination Project in Algeria. The project will treat seawater and supply drinking water to the city of Algiers. The project company is owned 70% by Ionics Inc. (now part of General Electric) and 30% by the Algerian Energy Company, which itself is owned by the Algerian state-owned companies, Sonatrach and Sonelgaz.  |
|  | $20 million
 | Term financing for Millicom Ghana, the first cellular operator in Ghana.  Proceeds will be used to increase coverage and telephone services in Ghana. Millicom is the first Risk Sharing transaction under the Africa Risk Sharing Facility. |
|  | $8 million | Citigroup successfully closed its third  financing in the amount of US$8 MM for Financiera Compartamos S.A de CV, a major microfinance lender in Mexico. This facility benefited from a comprehensive OPIC guarantee under a newly established Mexico OPIC Risk Sharing Framework Agreement. |

## OPIC Finance Program

**OPIC can provide financing on a project-finance or a corporate-finance basis, or a hybrid thereof.**
- Preference for capital expenditures.  Also eligible for privatization and acquisition finance with strong preference towards highly developmental projects.
- Most valuable in non-investment grade countries characterized by costs and credit constraints (but available in any of the 150 countries where OPIC is open for business).
**Eligibility & Guidelines**
- U.S. investors must own 25% of a project company.
- 50% of voting shares in a project company should be held by a private sector entity.
- Tenors range from 3-15 years, following a suitable grace period.
- Creditor participation is on a senior basis, pari passu with holders of other senior debt.
- OPIC will share in a first lien on fixed assets and any other appropriate collateral.
- OPIC normally requires a bi-lateral agreement but not a host government guarantee.

**OPIC’S objective is to promote and facilitate investment in developing markets by providing medium- to long-term funding to ventures involving significant equity or management participation by U.S. businesses.**

**OPIC can typically lend up to $250 million per project on either a project finance or corporate finance basis in countries where conventional institutions are often unable or unwilling to lend on such a basis.**

## Hamma Water Desalination

- Long-term OPIC financing supported by strong take-or-pay offtake agreement with Sonatrach, Algeria’s national oil & gas company, and Algerienne des Eaux
- Pathfinder greenfield project financing for the first of a series of water desalination projects awarded to international sponsors by Algerian Energy Company under a Government program to build new desalination capacity of 1 million cubic meters per day of potable water by 2008
- The transaction was closed in less than 18 months and was unaffected by GE’s acquisition of Ionics in late 2004
- Largest ever non-recourse project financing for a seawater desalinization plant using reverse osmosis technology
**Innovations**
**First ever project financing in Algeria for an onshore contracted project **
**Longest ever tenor for an onshore project financing in Algeria—first 18 year non-recourse financing in Algeria**
**First ever OPIC financing in Algeria**
**First ever non-recourse financing in Algeria funded by U.S. capital markets investors under an U.S. Agency guarantee,  previous US-Exim buyers credits were funded in the bank market and with full recourse to Sonatrach **
**Structure had single issuance into an offshore Trust, which obviated interest rate volatility. Disbursements were then able to be made discreetly minimizing funding costs**

**Borrower:**	Hamma Water Desalination SpA, a 70/30 joint-venture 	between GE Ionics and AEC.
**Issuer:**	Fixed Rate Funding & Liquidity, Limited – a Delaware 	Trust which acted as intermediate borrowing and funding 	vehicle.
**Purpose:**	The design, development, financing, construction, testing 	and commissioning, operation and maintenance of a 	US$250 million 200,000 m3/day seawater desalination 	plant in Algiers, Algeria.
**Agency Provider:**	Overseas Private Investment Corporation (“OPIC”) 	provided the comprehensive guarantee for the Certificate 	of Participation (“COPs”) issuance to U.S. Capital Market 	Investors.
**Offtaker:**	Long-term take-or-pay offtake agreement with 	Algérienne des Eaux and SONATRACH (Société 	Nationale pour la Recherche, la Production, le Transport, 	la Transformation et la Commercialisation des 	Hydrocarbures).
**EPC Contractor:**	Orascom Construction Industries SAE, Egypt and Besix 	SA, Belgium.
**Facility:**	Fixed-rate OPIC Amortizing Term Loan (the COPs).
**Total Financing:**	US$196 million (+ US$10 million recourse performance 	bond).
**Signing Date:**	25 June 2005
**Closing Date:**	6 December 2005
**Maturity:**	18 years
**Citigroup Roles:**	Sole Financial Advisor, Placement Agent of the OPIC 	COPs, Hedging Bank, Onshore Account Bank and 	Security Agent, Offshore bank, Paying Agent

**US$196,000,000 Term Loan Facility**

**Transaction Highlights**

## OPIC Finance Structure – Non-Recourse

***For Discussion Purposes Only***

- (1) OPIC extends a direct loan to the Borrower and sells Certificates of Participation (COPs) to U.S. capital market investors.  The COPs are guaranteed by OPIC.
- (2) Borrower makes principal and interest payments through the Facility Agent to the COPs Holders.

## OPIC Political Risk Insurance (“PRI”)

- OPIC’s PRI Program objective is to promote and facilitate U.S. investment in emerging market economies by helping businesses manage risk.
- OPIC offers the following types of Political Risk Insurance Coverage:

- Expropriation

- Political Violence

- Currency Inconvertibility

- PRI protects and compensates against nationalization, confiscation, or expropriation of funds or assets as well as covers against unlawful governmental actions restricting investors of fundamental rights in a project.

- OPIC compensates for property and income losses associated with violence undertaken for political purposes or motives.

- PRI protects investors against new currency restrictions or controls preventing the conversion from local currency to dollars. OPIC insures earnings, return of capital, principal and interest payments, and other fees associated with investment, and pays investors in U.S. dollars.

## Brasil Telecom: OPIC PRI Bond Offering

- Brasil Telecom provides fixed-line telecommunication services in nine Brazilian states located in the Western, Central and Southern regions of Brazil and in the Federal District, totaling 9.8 million of lines in service and 96% of market share for local services in the region
- Citigroup was the Sole Bookrunner and Lead Manager for this US$ 200 million OPIC PRI Bond Offering, with the right to re-open issue up to US$ 300 million
- Citigroup also obtained the Political Risk Insurance (“PRI”) for the bond through OPIC, with an amount of up to US$ 27 million, which is equivalent to 12-month debt service
- The PRI term coverage is 10 years and covers currency inconvertibility and expropriation of funds
- The proceeds will be used for refinancing of short-term debt, expansion and modernization of network and IT infrastructures, and other general corporate purposes
- Brasil Telecom needed long-term financing at attractive costs, which was made possible through the OPIC PRI enhancement solution offered by Citigroup
**Market Reaction**
- First successful and oversubscribed OPIC enhanced transaction in the Latin America market
**Innovations**
**First Agency guaranteed bond for Brazil following the 2002 market freeze for the country**
**The transaction achieved better pricing in the market than a bond backed by private insurers**** **

**US$200,000,000 Political Risk Insurance Bond**
**Borrower:****	**Brazil Telecom S.A. (“BrTelecom”)
**Purpose:****	**To refinance short-term debt, 	expansion and modernization of 	network and IT infrastructures and 	other general corporate purposes
**Guarantor:****	**Overseas Private Investment 	Corporation (“OPIC”) provided the 	Political Risk insurance for the bond
**Facilities:****	**US$ 200,000,000 Senior Unsecured 	Notes under 144A/Reg. S
**Total Financing:****	**US$200 million
**Total Project Cost:****	**up to US$ 300 million
**Ratings:****	**BBB- (S&P)
- 	Baa3 (Moody’s)
**Closing Date:****	**February 17, 2004
**Maturity:****	**February 18, 2014
**Citigroup Roles:****	**Sole Bookrunner and Lead Manager

**BRAZIL TELECOM S.A.**

**Transaction Highlights**

## OPIC PRI Structure

***For Discussion Purposes Only***

- (1) Lenders compromising of at least 25% U.S. financial
- institutions, lend into Trust.
- (2) Trust lends to Project Company
- (3) Project Company repays loans through Trust.
- (4) In the event a default, Lenders, through the Trust, make a
- claim under the PRI policy from OPIC.

## Millicom Ghana Limited: 

- Millicom Ghana Limited:
- US$20 Million OPIC-Supported Financing

**Citigroup as Sole Lender, Lead Arranger and OPIC Facility Agent closed a US$ 20MM financing in July 2005 to finance capital expenditures to expand network capabilities of Mobitel’s GSM network in Ghana**

- Millicom Ghana (widely known by its trade name “Mobitel”) was the first cellular operator in Ghana, having commenced operations in 1992 with an analog ETACS network. The company also pioneered the concept of pre-paid services in Ghana with the launch of the “Starcall” pre-paid card product in 1998
- The facility will support the purchase of key network equipment to Ghana to increase network coverage and improve service quality
- The door-to-door tenor is 5 years with an average life of 3.17 years
**Innovations**
**Achieved a successful close and an expeditious transaction execution despite challenging market circumstances**
**First Citigroup OPIC facility for telecommunications in Africa**

**Borrower:****	**Millicom Ghana (“Millicom” or “Mobitel”)
**Guarantor:****	**OPIC
**Shareholders:****	**Millicom Ghana is 100% owned by Millicom 	International Cellular S.A. (“MIC”), with MIC 	having increased its shareholding from 70% 	to 100% in mid-2002
**Transaction Size:****	**US$20 million
**Purpose:****	**To finance expenditure for telecom facilities 	and implement Millicom Ghana’s strategic 	plan to increase its network capabilities on the 	mobile GSM network in Ghana, take 	advantage of the continuing growth in the 	GSM market in Ghana.
**Tenor:****	**5 years
**Closing Date:****	**19 July, 2005
**Citigroup Roles:****	**Sole Lender, Lead Arranger and OPIC Facility 	Agent
**Lender:****	**Citigroup

**Millicom**

**Transaction Highlights**

## OPIC Risk-Sharing Transaction

- (1)	OPIC provides a 100% comprehensive guaranteed loan for 50-75% of full loan amount to Borrower with Citigroup acting as lender of record
- (2) 	Citigroup provide a clean loan to the Borrower for the remaining loan amount and issues the loan in the full amount to the Borrower
- Repayments of principal and interest flow through Citigroup

- Citigroup

- Borrower

- (1)

- (2)

- (3)

***For Discussion Purposes Only***

## OPIC and Citigroup Transactions Around the World

- Local Corporate Finance Offices

- Global Export and Agency Finance Regional Offices

- Countries where OPIC and Citigroup work together

- Bogotá

- Lima

- Sao Pau

- Buenos Aires

- Santiago

- Chicago

- Mexico City

- Miami

- Dominican Republic

- Algiers

- Nair

- Johannesburg

- Cairo

- Dakar

- London

- Brussels

- Paris

- Milan

- Frankfurt

- Bahrain

- Tokyo

- Seoul

- Bangkok

- Kuala Lu

- Singapore

- Jakarta

- Manila

- Taipei

- Shanghai

- Hanoi

- Lima

- Nair

- obi

- Bogotá

- Lima

- Sao Paulo

- Buenos Aires

- Santiago

- Caracas

- Chicago

- Mexico City

- Miami

- Dominican Republic

- Algiers

- Nair

- Johannesburg

- Cairo

- Dakar

- London

- Brussels

- Paris

- Milan

- Frankfurt

- Mumbai

- Istanbul

- Bahrain

- Hong Kong

- Seoul

- Bangkok

- Kuala Lumpur

- Singapore

- Jakarta

- Manila

- Hanoi

- Sydney

- OPIC and Citigroup Transactions Around the World

- Tel Aviv

## Citigroup’s Leading Experience with OPIC 

**Citigroup is the market leader in developing innovative OPIC financing structures.**** **

- Between **2002** and **2005**: Citigroup and OPIC completed over 20 Risk Sharing transactions and closed the Iraqi Middle Market Development Fund (IMMDF).
- First financial institution to have secured OPIC insurance for an interest rate swap obligation (Tri-Energy).
- First financial institution to arrange a co-insurance agreement with the private sector (Brazil – Zurich Insurance).
- First Equity investment fund established for OPIC (African Growth Fund, 1988).
- First lending trust structure providing OPIC coverage to a syndicate of multinational banks (Kafco, 1992).
- Only multi-user Commercial Paper vehicle accepting OPIC-backed assets (1993).
- First public offering of OPIC Certificates of Participation (1994).
- Since 1994, OPIC and Citigroup have signed commitments of close to US$5 billion.

**Citigroup and OPIC have been partner for many years.  The partnership success is reflected in the innovation and number of deals completed.**** **

## Contact List

| Name | Position | Phone Number | Email |
| --- | --- | --- | --- |
| Eli Hassine | EAF Global Head
Managing Director | +1 (212) 816-1710 | eli.hassine@citigroup.com |
| Valentino Gallo | EAF Americas Head
Managing Director | +1 (212) 816-1008 | valentino.gallo@citigroup.com |
| Pat Brockie | EAF EMEA Head
Managing Director | +44 20 7986 4915 | patrick.brockie@citigroup.com |
| Ae Kyong Chung | Director | +1 (917) 328-8367 | aekyong.chung@citigroup.com |
| Steve Ray | Director | +44 20 7986 4837 | stephen.ray@citigroup.com |
| Heiko Krakowitzer | Director | +44 20 7986 4826 | heiko.krakowitzer@citigroup.com |
| Luis Hernandez Aramburo | Vice-President
 | +1 (212) 816-8227 | luis.a.hernandezaramburo@citigroup.com |
| Rodrigo Vega | Vice-President | +1 (212) 816-3526 | rodrigo.a.vega@citigroup.com |
| Aaron Neus | Associate | +1 (212) 816-1236 | aaron.neus@citigroup.com |
| Christopher Kiley | Analyst | +1 (212) 816-2897 | christopher.kiley@citigroup.com |

**Citigroup Export & Agency Contact List**

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## Slide 19