AmeraMex International Inc. (AMMX)

[garronsc]

Additional Research - Part 3

The Niger article in my last post specifically said the purpose of the workshop put on by the Ministry of Transport was "to communicate the benefits of the Investment Code for the transport sector to facilitate investment and financing of import of new vehicles" and to provide "technical presentations .. on.. steps to take to benefit the mechanisms of guarantee funds AFD and SAHFI TANYO".

TANYO and SAHFI were created by the European Union for the sole purpose of encouraging loans to the private sector in Niger.

See: http://www.google.com/translate_c?langpair=fr|en&u=http://www.sahfi.net/index.html

Note that in the link above, the Bank of Africa (BIA) is a partner for SAHFI. This is the bank who signed the deal with Niger in the the January 6, 2014 press release (see Reply link above).

And finally, the following is an excerpt from a World Bank document published in 2010 about Niger and SME (small and medium enterprise) financing that specifically mentions SAHFI and TANYO:

Source: https://openknowledge.worldbank.org/bitstream/handle/10986/15969/807290ESW0Nige00Box379814B00Public0.txt?sequence=2

A. SMALL AND MEDIUM ENTERPRISE FINANCING

45. Bank credit in Niger is a major constraint for businesses, particularly SMEs. It
trails far behind internal resources as a source of financing. According to the Investment
Climate Assessment (ICA), 70 percent of businesses surveyed have indicated that access to
financing is a major constraint. The same can be said of the cost of credit which was 2.2
percent higher for SMEs than for large enterprises. Access to traditional bank financing (loans
and overdraft facilities) is mainly determined by the size of the enterprise, availability of
audited financial statements, and whether or not the firm is in the import business. The
underlying causes of this lack of access to financing for SMEs are, on the demand side, the
lack of transparency of SMEs, as reflected in the difficulties they have in producing reliable
financial statements and sound business plans; and the lack of guarantees/collateral admissible
under BCEAO regulations. On the supply side, the main constraints are the banks’ lack of
capacity to move away from loans based on guarantees and to analyze the situation of non-
traditional customers offering limited information on their financial position.

46. A new mechanism has been established to remove some of the constraints for
SMEs access to finance. The TANYO Group offers technical assistance to firms for
preparing financial statements, business plans, and loan applications. If the financing is
approved, then the Group also monitors the investments and operations. The Sahelian
Financial Corporation (SAHFI) offers a partial loan guarantee equivalent to a maximum of
CFAF 50 million or 50 percent of the loan amount (whichever is lower). For its part, the
European Investment Bank has already granted two lines of credit that have been fully
utilized in the amount of € 13 million. A third line of credit is now in preparation. The Group
is currently looking toward international agencies for additional financing. In addition to
individual guarantees, the scheme could also propose portfolio guarantee instruments that
would allow some banks and MFIs to reach smaller enterprises. This portfolio guarantee
should be accompanied by technical assistance providedby donors and international financial
institutions.

*** End of Quote ****

I think many of us have been under the impression that the government of Niger is purchasing these trucks, but in the AMMX press release on August 14, 2014 - Lee Hamre made the following statement "the two banks and the government of Niger expect the various contracts between the banks, the government and private companies responsible for the transportation projects to take six to eight weeks for completion". Source: http://www.ammx.net/profiles/investor/ResLibraryView.asp?BzID=1512&ResLibraryID=71950&Category=1051&G=730

This clearly indicates that private companies are involved in the purchase of these trucks.

The whole point of these "10th EDF" aid funds is to spur private businesses to subsidize purchases and to get local banks to feel safe in making loans through backed by loan guarantees. The World Bank (or some other EDF proxy) guarantees the loans after MUCH due diligence and finally signs off on the program so the banks and government can issue those loans.

From the press releases and news articles, it appears that
(1) Ameramex has positioned themselves as the supplier for the 1500 trucks and 1500 trailers over a 5 year period,
(2) there are now 3 banks issuing lines of credits to the private sector in cooperation with the government of Niger for the purchase of these trucks in compliance with TANYO/SAHFI policies under the EDF
(3) the European Union through the EDF program is guaranteeing and possibly supplementing these loans through the World Bank or some other proxy to encourage development of the transport sector in Niger.

This information to me seems to corroborate everything Ameramex has told us although they haven't spelled out the details very well if these are indeed the details. $200 million is a lot of money to underwrite and there are a lot of criteria that will have to be met and maintained by all parties involved to finally secure the guarantee on these funds. I don't know what Lee Hamre can do as the supplier to convince the banks to guarantee these loans, but it makes sense now why there could be so many delays and why they can't give us solid assurance this program will ever reach a final approval and agreement.

I look forward to anybody either supplementing or tearing away at the research.