Facility Agreement For Pre-Export Finance Transactions

Pre-Export Finance (PXF) is a well-established structure used to finance producers of goods and raw materials (see practical note: pre-export financing – structure, parties and risks). It is a kind of commercial financing. This allows you to negotiate long-term supply contracts with producers in exchange for financing that we will finance. It provides the manufacturer with access to financing that would otherwise not be available to the manufacturer. It is also a financing structure often used by Erste Group in the treatment of legal systems that have excessive regulations for the stock exchange, which may not favour the granting of direct cross-border credit. In the case of a forward financing transaction, the borrower uses the facilities to pay in advance for the goods he must deliver by the manufacturer of these products as part of a sales contract. The borrower enters into a contract with the seller and an agreement in advance. The borrower exaggerates the prepayment and the seller uses the proceeds of the advance funds to make the goods. The remaining amounts under the down payment agreement are increased by interest and the delivery of the goods by the seller is charged on the amount of the outstanding advance to be liquidated. In most cases, the exporter will ensure that the buyer sends the payment directly to the lender. The lender then sends the money to the exporter who has deducted, as well as the fees and interest associated with the loan; this is called advance financing.

Advance financing allows the manufacturer to ensure that it is paid for the goods it sends to the buyer. It also allows the buyer to enter into long-term contracts, which he might not have been able to do without the financing. In the case of typical pre-export financing, the lender pays funds directly to a producer (the borrower). The borrower will use the funds The financing of the transaction would be provided by us via a committed revolving loan, the proceeds of which are used to finance the purchase of the equipment. The loan facility is repaid from payments made by the customer for the equipment provided. Proceeds from the sale would pass through a particular bank account and be used to pay interest and repay the facility. The financing would be provided by us against the guarantee of a transfer of the manufacturer`s rights under the main commercial contracts at the origin of the transaction, including sales contracts with end buyers, and a guarantee on the registered bank account.

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