A Mexican satellite operator will continue to seek financing from the U.S. Export-Import Bank despite the fact that it does not need the help from the federal agency, Crony Chronicles has reported.
Mexico-based satellite operator Satélites Mexicanos, known as Satmex, announced that even though it did not need a low-interest rate loan from the U.S. government, it would continue to seek one. During a conference call with investors, Satmex CFO Juan Garcia said that his company’s satellite project "is fully funded" based on the company’s cash flow and is not dependent on a loan from the U.S. Export-Import Bank (Ex-Im). However, Satmex is still working to receive a $255.4 million direct loan from the bank for the purchase of two of satellites.
The statement from Mr. Garcia raises an interesting question. If a company can finance a project on its own, why should it get money from the government? Typically, a company makes the case it needs a government loan because it’s facing bankruptcy or is in an infant industry. Those situations don’t apply here. Instead, Satmex admits it does not need the loan.
The U.S. Ex-Im Bank provides financing for foreign firms seeking to purchase American-made products. Its financing typically takes the form of a loan guarantee, although it sometimes extends direct loans.
The bank’s charter prohibits it from financing deals where private financing exists, although it can also extend financing to counter subsidized financing from foreign governments.
Experts have raised concerns about market intrusion in the past, although the bank has always denied providing unnecessary financing.
The bank has been critiqued in the past for engaging in crony capitalism. President Barack Obama described the bank in 2008 as "little more than a fund for corporate welfare."
The Crony Chronicles has complied a map of the locations of the recipients of the Ex-Im Bank’s work.