[Federal Register Volume 59, Number 229 (Wednesday, November 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29411]


[[Page Unknown]]

[Federal Register: November 30, 1994]


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AGENCY FOR INTERNATIONAL DEVELOPMENT

 

Housing Guaranty Program; Notice of Investment Opportunity

    The purpose of this notice is to provide advance notice to 
interested firms that Nedcor Bank Limited of South Africa (``Nedcor'') 
intends to request proposals for the services of a U.S. financial 
institution to raise funds in the U.S. market pursuant to the U.S. 
Agency for International Development's (``USAID'') Housing Guaranty 
Program. Nedcor will seek to borrow US$30 million, or the South African 
Commercial Rand equivalent thereof (the ``Loan''). Nedcor's long-term 
objective is to develop a relationship with a U.S. financial 
institution that will provide Nedcor with future access to the U.S. 
capital market. For the purpose of this particular transaction, Nedcor 
intends to request proposals on an expedited basis. Therefore, upon 
receipt of this notice, interested firms should promptly communicate 
with Nedcor's representative, Dr. Brennan Nelson, at the following 
address:

South Africa Project No. 674-HG-001, Housing Guaranty Loan No. 674-HG-
001 A01

Postal Address

Nedcor Bank Unlimited, P.O. Box 1144, Johannesburg 2000, Republic of 
South Africa, Attn: Dr. Brennan Nelson (Branch 858)

Physical Address

Nedcor Bank Limited, 100 Main Street, 8th Floor, Johannesburg 2000, 
Republic of South Africa, Attn: Dr. Brennan Nelson (Branch 858)

    Dr. Nelson will be available, upon issuance of this notice, to 
answer questions concerning this transaction and the programs it will 
support by telephone at (27 11) 630-7365; and by facsimile transmission 
at (27 11) 630-7231 or (27 11) 630-7584.
    Firms interested in responding to this notice must do so by 12:00 
noon, Eastern Standard Time, on January 4, 1995, by submitting their 
bids to Nedcor at the address specified above. Copies of all bids 
should be simultaneously sent to the following: Mr. David Grossman, 
Assistant Director, Mr. Peter Pirnie, Financial Advisor, Facsimile 
(preferred communication): (202) 663-2772 and (703) 875-4384.
    Within 48 hours after the closing time for submission of proposals, 
Nedcor, with the approval of USAID, will select the financial 
institution(s) deemed best qualified to arrange the financing on terms 
most advantageous to Nedcor. Thereafter, Nedcor would seek to close the 
transaction within 30 days after it has notified the successful 
financial institution(s) that its proposal has been accepted, but in no 
event later than 45 days after such notification.

Additional Information

    Provided below is a preliminary description of the terms of the 
financing. Nedcor reserves the right, however, to change these terms 
after the selection process based upon advice from the consultations 
with the successful respondent.

I. Background

    The Loan will be guaranteed by the U.S. Government acting through 
USAID. The Loan will be part of the U.S. Government's special aid 
package in support of the democratic transition in South Africa. It 
will be the first of its kind to a private sector bank in South Africa. 
The funds generated by this Loan will be used to provide the initial 
funding for a home mortgage program dedicated to servicing the large 
and immediate needs of South African Black families for housing.
    The Loan will be either a fixed-rate or a floating rate, 8-year, 
non-amortizing (bullet) loan, denominated in either United States 
dollars or South African Rand, and will be made available to Nedcor at 
any of its branches. Restrictions may be placed on the transferability 
of the promissory notes evidencing the Loan, in the event such notes 
are denominated in Rand. All transactions concerning the Loan must be 
reported to both Nedcor and USAID.
    The Loan will be backed by a full faith and credit guaranty as to 
payment of both principal and interest of the United States of America, 
acting through USAID. The guaranty will be issued pursuant to the 
authority of Section 222 of the Foreign Assistance Act of 1961, as 
amended (the ``Act''). In the event the Loan is disbursed in Rand, 
USAID's liability under its guaranty of the Rand obligations of Nedcor 
shall be limited to (1) The Rand equivalent of U.S. $30 million in 
principal, plus (2) the Rand equivalent of the total aggregate interest 
payments due over the life of the loan as calculated in U.S. dollars, 
which amounts shall be determined using the closing Rand/U.S. dollar 
spot rate for Commercial Rand set by the South African Reserve Bank at 
the close of business on the date on which the Loan is disbursed.
    Investors eligible to receive the USAID guaranty are those 
specified in Section 238(c) of the Act. They are: (1) U.S. citizens; 
(2) domestic U.S. corporations, partnerships, or associations 
substantially beneficially owned by U.S. citizens; (3) foreign 
corporations whose share capital is at least ninety-five percent (95%) 
owned by U.S. citizens; and (4) foreign partnerships or associations 
wholly owned by U.S. citizens.
    In order to assure compliance with statutory provisions binding 
USAID, USAID reserves the right to accelerate the Loan only in the 
extraordinary event of a material breach by Nedcor of its obligations 
with regard to the use of the proceeds of the Loan. It should be noted 
that since the inception of the Housing Guaranty Program in 1962, USAID 
has not exercised its right of acceleration.

II. Objectives of the Proposed Financing

    The objectives of Nedcor with respect to the proposed financing are 
to:
    A. Minimize the cost of financing the Loan to Nedcor, and thereby 
minimize its debt payments, consistent with the other objectives stated 
herein.
    B. Minimize the ongoing administrative costs of financing the 
program.
    C. Establish a positive precedent, in terms of market perceptions, 
for contemplated future offerings of similar securities by Nedcor.

III. Diversity of Investors and Financial Services Firms

    Nedcor desires to encourage the participation of minority- and 
women-owned and controlled investors and financial services providers 
to the maximum extent practicable in the financing of the Loan. To this 
end, Nedcor strongly encourages such firms to respond to this notice, 
either directly or through a consortium or some other joint venture 
arrangement. Nedcor also strongly encourages that all firms proposing 
to provide financial services make efforts to offer the investment 
opportunity to such minority- and women-owned and controlled investors, 
and to other investors who have a long-term commitment to supporting 
South Africa's democratic transition.

IV. Scope of Services

    In order to accomplish Nedcor's objectives, the provider of 
financial services will need to offer the following:
    A. Market the Loan to Eligible U.S. investors and, in the event the 
promissory notes evidencing the Loan are denominated in Rand, market 
the Loan to accredited eligible U.S. investors.
    B. Provide a mechanism for notification to USAID in the case of any 
default on the part of Nedcor, in the event the promissory notes 
evidencing the Loan are denominated in Rand.
    C. Advise and assist in obtaining any necessary exemptions or 
approvals from securities exchanges, governmental securities regulators 
or other institutions, and any necessary legal opinions.
    D. Provide a detailed listing and full disclosure of all fees and 
costs for the transaction, which must be inclusive of all legal, 
consulting, and management fees, and costed into the final rate/result.

V. Required Information for Proposals

    Each proposal for the provision of banking services will need to 
address the questions set forth in this section, in the order shown and 
as specifically and succinctly as possible.
A. Structure of Loan
    You will need to discuss your financial institution's views with 
respect to the structure of the Loan that would best serve Nedcor's 
objectives, addressing at a minimum the following issues:
    1. The terms of the financing have not yet been determined and are 
subject to USAID's approval. However, for purposes of your proposal, 
you will need to provide a complete set of financial forms detailing 
the costs you expect Nedcor would incur as a result of your recommended 
financing, based on the financing of US$30 million, and in terms of the 
following two scenarios:
    a. Rand-denominated Loan:
    (i) Fixed rate, eight-year, non-amortizing (bullet).
    b. United States dollar-denominated Loan:
    (i) Fixed rate, eight-year, non-amortizing (bullet), and based on 
the yield of a U.S. Treasury bond with a remaining life of eight years, 
such as the bond due November 2002; and
    (ii) Floating rate, eight-year, non-amortizing (bullet), and based 
on the yield of the twenty-six (26) week U.S. Treasury bill as of COB 
December 18, 1994 (indicative).
    Please specify the fees you would charge to provide banking 
services. You will also need to include an itemization of all legal 
fees, management fees, consultation fees, selling concession fees and 
costs of issuance.
    2. Discuss any alternative structures which should be considered.
B. Marketing Strategy
    You will need to discuss your financial institution's view of the 
optimal strategy for the marketing of the Loan, keeping in mind the 
requirements for any exemptions from securities registration being 
relied upon.
C. Organizational Experience and Capabilities
    Because Nedcor's overall objective is to develop a long-term 
banking relationship and not simply to arrange for this US$30 million 
financing, firms responding to this notice will be required to provide 
more information than may be typical for a loan of this size. 
Accordingly, you will need to provide the following information on your 
organization:
    1. A brief, general description of your financial institution. 
Enclose your audited financial information for the two most recent 
periods under separate cover.
    2. Your financial institution's ``equity capital position'' (net 
capital) and ``excess net capital position'' based on Securities and 
Exchange Commission regulations for uniform reporting (if applicable).
    3. A discussion of your financial institution's qualifications to 
serve as lead provider of financial services for the Loan, including in 
particular:
    a. Experience in bringing U.S. Government-guaranteed securities to 
the market;
    b. A description of your financial institution's capacity to 
provide financial services and distribution and marketing capabilities 
in the U.S., including examples of significant debt-offerings managed 
by your firm during the last five years;
    c. Any other relevant experience or particular strength that would 
give your firm a distinct competitive advantage in providing the 
services required.
D. Qualifications of Personnel
    You will need to provide the following information:
    1. The names and relevant experience of the professionals, 
including any key sales and distribution personnel, to be assigned to 
this matter, with a description of each individual's role.
    2. If you would expect to rely on outside advisors, such as legal 
counsel, accountants or local representatives, you will need to 
identify the persons or firms which you propose to retain.

VI. Criteria for Selection

    Selection of the provider(s) of financial services and the terms of 
the Loan will be initially subject to the individual discretion of 
Nedcor and thereafter will be subject to the approval of USAID. 
Disbursements under the Loan will be subject to certain conditions 
required of Nedcor by USAID as set forth in agreements between Nedcor 
and USAID. Awards will be made to the proposals found to be most 
advantageous to Nedcor based on the following criteria, and such other 
criteria as Nedcor may determine:
A. Financial Plan
    Ability to minimize Nedcor's financing costs; and
B. Previous Experience, Distribution Capabilities, and Personnel
    The firm's experience with similar, previous financing programs 
executed primarily in the U.S. capital markets, the extent of the 
firm's distribution network, and experience of specified assigned 
personnel.
    Information as to the eligibility of investors and other aspects of 
the USAID housing guaranty program can be obtained from: Mr. Peter M. 
Kimm, Director, Office of Environment and Urban Programs, U.S. Agency 
for International Development, Room 409, SA-18, 1601 N. Kent Street, 
Rosslyn, VA 22209, Fax Nos: (703) 875-4348 or (202) 663-2772, 
Telephone: (703) 875-4300 or (202) 663-2773.

    Dated: November 23, 1994.
Michael G. Kitay,
Assistant General Counsel, Bureau for Global Programs, Field Support 
and Research, U.S. Agency for International Development.
[FR Doc. 94-29411 Filed 11-29-94; 8:45 am]
BILLING CODE 6116-01-M