Exim Bank approves Garuda loan

Exim Bank approves Garuda loan

WASHINGTON (Dow Jones): The U.S. Export-Import Bank approved
Thursday a long-term loan guarantee to back Boeing Co.'s (BA)
$345 million export of 11 737 aircraft to state-owned airline
Garuda Indonesia.

The Boeing aircraft will help Garuda provide critical links
between Indonesia's widely scattered islands at a time when many
of the country's domestic airlines have ceased or curtailed
operations, according to a U.S. Exim Bank statement.

"We continue to look for ways to finance credit worthy
transactions in Indonesia as the Indonesian government's economic
reforms continue to move forward," said Exim Bank Chairman James
A. Harmon.

The exports will take the form of an asset-based finance lease
with the aircraft serving as collateral. To address credit risks,
Indonesia's Finance Ministry will serve as lessee of the planes
rather than the usual arrangement whereby the airline is the
lessee.

The Finance Ministry will agree to allow and cooperate in
repossession of the aircraft if it defaults.

The Finance Ministry and Garuda are in the process of choosing
a lender to arrange the loan that U.S. Exim Bank will guarantee.

The six 737-300 and five 737-500 narrow-body aircraft provided
will be fitted with engines made by CFM International Inc. of
Cincinnati, Ohio.

CFM is a joint venture between France's SNECMA and General
Electric Co. (GE)

U.S. Exim Bank is a government agency that assists export
financing for U.S. goods and services. Its financing for Boeing's
sale to Indonesia will take effect after a normal 30-day
congressional review period.