When Brisbane-based Ferra Engineering Pty Ltd recently won its third sub-contract to supply parts to the F-35 joint strike fighter (JSF) program, it needed additional working capital to deliver on the sub-contract.
Export Finance and Insurance Corporation (EFIC), the Australian government’s credit agency, provided an A$2.7 million export working capital guarantee to Ferra’s bank, Westpac, enabling the bank to lend this amount to Ferra to assist in financing the sub-contract.
Ferra’s sub-contract was to manufacture, assemble and test weapons bay adapters, the mechanisms to hold and release the munitions carried by the JSF.
Ferra is the only company worldwide approved by Lockheed to make and assemble weapons bay adapters for the JSF program.
While Ferra’s work involved substantial costs for materials and labour, under the sub-contract it would not receive payment until after the parts were shipped. This meant that the company faced a working capital shortage and needed additional funding to perform the sub-contract.
With support from EFIC, Westpac was willing to provide a loan for working capital to Ferra. EFIC’s export working capital guarantee gave the bank a guarantee for repayment of the loan.
“We’ve completed similar sub-contracts for the JSF project, so we’re confident of our technical ability to deliver,” said Mark Scherrer, Ferra’s Managing Director.
“But with these large orders, maintaining cash flow throughout the sub-contract can be a challenge and that’s where the assistance of EFIC and Westpac has been invaluable.”
An export working capital guarantee from EFIC to an exporter’s bank guarantees repayment of amounts that the bank lends to the exporter to finance one or more export contracts.
EFIC provides finance and insurance solutions to help Australian exporters to overcome the financial barriers they face when growing their businesses overseas.
For over 50 years, EFIC has helped successful businesses to win export contracts, finance their export activities and protect export trade or overseas investments when their bank is unable to provide all the support they need.
EFIC works directly with exporters or with their banks to provide loans, guarantees, contract bonds and insurance products which can be tailored to meet the needs of both large and small exporters.
Ph: 1800 093 724