UK chancellor George Osborne has announced that contractor Carillion will be the first company to benefit from the $4.8bn Direct Lending Facility that is being provided by UK Export Finance (UKEF). The money, which was announced in the April Budget, is intended to boost UK exports by making it easier for overseas clients to buy from UK companies.
The $122m contract is to deliver the first phase of the Dubai World Trade Centre District development for the Dubai World Trade Centre.Â
The work involves the construction of a 146,000 square metre development between the current Dubai International Convention and Exhibition Centre and Emirates Towers. It will include an eight-storey office building and a 588-room business and tourism hotel.
The loan was arranged for Carillion’s client by Deutsche Bank, which is one of 20 financial institutions that will operate the scheme for the UK government. The Dubai deal was somewhat unusual in that the fund’s guidance notes states that the money isÂ intended to provide money to clients that "may be unable to get it from a commercial bank because of the country they are in or because the relatively small size of the loan means private sector lending is not economically viable". Neither of these conditions are met by Carillion’s employer.
Under the Direct Lending Facility, HM Treasury has made the funding available to support export finance on a first come, first served basis. The loan is not necessarily made at advantageous rates. Borrowers pay a premium for their money that is governed by OECD agreements; they also pays interest at a fixed rate.Â
Osborne, said: "Helping British companies to access global markets is a key part of our long-term economic plan. So, I’m delighted to announce the first deal supported by UKEF’s Direct Lending Facility, along with the 20 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. This 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."