811.516 Export-Import Bank/11–248
Memorandum by Mr. J. J. Stenger of the Division of Investment and Economic Development to the Director of the Office of Financial and Development Policy (Knapp)
Subject: Agenda for Meeting of Board of Directors Eximbank Novembers, 1948.
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4. Brazil—Twin Coach Company. The Twin Coach Company has requested the Bank to again change the terms of the credit, authorized by the Bank on July 21, 1948 and amended on September 1, 1948, to finance the sale of busses for use in Brazil. The proposal would increase: (1) Eximbank financing to $3,565,000 instead of the present $3,288,000; (2) number of busses to 230 instead of 200; (3) Twin Coach participation with their own funds to 15% (or $629,000) instead of 10% (or $365,000) as compared to the existing credit. Twin Coach reserve liability with respect to financing done by Eximbank would remain unchanged at 25% of the Bank’s commitment but would increase in amount to $891,000 instead of the present $822,000. The increase in the number of busses would be obtained by cancelling 50 busses for Relampago (Rio), and increasing from 120 to 200, the number of busses financed for the Sao Paulo Municipal Transport Corporation.
Twenty-five busses have already been shipped to Relampago of Rio, [Page 394] for which Twin Coach would endeavor to secure other financing. An amicable agreement has been reached for cancelling or deferring the remainder of 25 in the Relampago sale. The credit modification as requested would provide, then, for the sale of the 30 busses to the Sao Paulo–Santos line (Cometa) and an increase from 120 to 200 busses for CMTC.
A condition of the Eximbank approval, which is still unsatisfied, is the securing of registry and exchange assurances from the Brazilian exchange control authorities. The Finance Minister has indicated a reluctance to allocate exchange for this purpose but has not stated definitively that the application has been or will be denied. At present it is uncertain whether registration and exchange assurances will be granted.
It may be recalled that in consideration of the previous action on July 21, 1948 the Bank cut the number of busses for CMTC from 200 to 120 which, in the judgment of the staff of the Bank, was considered sufficiently large to permit economical operations. The staff committee, on the basis of the material submitted, is not inclined to change its view on this point. The staff committee is also of the opinion that the Bank should not place itself in the position of proposing to the exchange control authorities and the Finance Minister of Brazil an increase in the exchange allocation after the authorities have indicated their reluctance to allocate exchange for this purpose. The staff committee, therefore, recommends that there be no change in the terms of the credit as previously authorized.
Recommendation: The Department does not object to the recommendation of the staff. This has been cleared with the other interested divisions in the Department.
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