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Chancellor announces landmark £75 million deal between Carillion and Dubai World Trade Centre.
Chancellor of the Exchequer George Osborne today (Monday 6 October) announced the first contract to be supported by UK Export Finance’s enhanced Direct Lending Facility (DLF), whilst on a regional tour of the midlands.
The availability of a £34 million loan from the Direct Lending Facility has helped Carillion to secure a significant contract with Dubai World Trade Centre LLC to provide construction services.
The Chancellor also welcomed the announcement by UK Export Finance appointing 20 financial organisations to its panel of partners to help deliver loans under the Direct Lending Facility.
Deutsche Bank have acted as partners in arranging the loan in support of the Carillion deal and will also be providing a further £34 million, guaranteed by UK Export Finance.
The announcements come as part of the Chancellor’s radical overhaul of UK Export Finance announced at Budget, giving Britain the most competitive export finance offer in Europe.
Chancellor of the Exchequer George Osborne said:
Helping British companies to access global markets is a key part of our long term economic plan.
So today I’m delighted to announce the first deal supported by UK Export Finance’s Direct Lending Facility (DLF), along with the twenty financial institutions that are going to help us deliver the loans.
It is great to see successful companies like Carillion winning contracts around the world. Today’s deal, the first in a pipeline of many, will help us reverse the age old trend of not exporting enough, boosting growth and creating jobs.
Carillion Chief Executive, Richard Howson, which is the first UK exporter to be supported by a Direct Lending Facility loan to its client, Dubai World Trade Centre LLC, commented:
This is a significant and very important contract for Carillion, which will help us to build on our success in the Middle East and make further progress with our strategic objective of growing our business in the Region.
The Direct Lending Facility is a major new development that is providing us with the support we need to achieve our export goals.
David Godfrey, Chief Executive of UK Export Finance added
This is a key milestone in the delivery of the £3 billion Direct Lending Facility.
Panel members cover a wide range of overseas markets, with complementary geographical strengths that will make it easier for UK companies to arrange competitive loans throughout a worldwide network.
That reach will increase UKEF’s capacity to lend to overseas buyers of UK products and services.
It will also provide a springboard to help us cater for the needs of a broad range of companies, in a variety of sectors, requiring loans of different sizes.
Commenting on the appointment of 16 British Bankers Association (BBA) members to the 20-strong DLF panel, Irene Graham, Executive Director of the BBA said:
International trade plays a vital role in supporting our economy and the DLF means that export finance will be cheaper and easier for businesses to access.
The banking industry has worked with UK Export Finance to revise the facility and it’s very pleasing to see the range of BBA members that will be partners to it.
This is invaluable support for businesses selling overseas.
UK Export Finance is the UK’s export credit agency. It supports long term economic growth and competitiveness by complementing the private market with insurance for exporters, loan guarantees to banks, and support for and provision of loans to overseas buyers of UK goods and services.
Sectors in which UK Export Finance has supported exports include: aerospace, petrochemicals, construction, oil and gas, mining and metals, telecommunications, and transport.
The enhanced DLF was announced by the Chancellor of the Exchequer in March 2014 and there are many transactions under active consideration. These transactions range in value from £5 million to over £500 million.
Dubai World Trade Centre LLC is an office and entertainment complex, including conference centre facilities. The Carillion contract includes an IBIS hotel, an office block and associated infrastructure.
The interest rate under the DLF will be charged at the lowest rate permitted in accordance with the OECD Arrangement.
UK Export Finance has a regional network of Export Finance Advisers supporting export businesses.
Prior to the appointment of the DLF panel, direct lending was available directly through UK Export Finance. The new arrangements are intended to make it easier for the buyers of UK exports to access the loans - extending the global reach of UK exporters.