USA FDI News – April 2016

USA FDI News highlights the FAQs arising from your projects – from how to finance a deal to selecting the right visa or tax strategy and more. We want to keep USA FDI News interactive and relevant to your international business or individual investment strategies.

This issue of USA FDI News features practical advice on financing your U.S. investment. Brian Fulk, the Senior Vice President of Business Development for the Greater Richmond Partnership, Inc., and a former international banker, explains how to obtain financing for your FDI project, and lays out the options for dealing with U.S. and foreign banks.

Please see full Newsletter below for more information.

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Option 1: Finance the U.S.
operation with an equity (cash)
infusion from the parent company.
Option 2: The parent company
arranges to extend an intercompany
loan.
Option 3: The parent’s house bank
extends a loan with or without
direct parent support.
Option 4: Ask your U.S.-based
bank to extend a loan (or lease
for equipment) under a parent
guaranty.
Option 5: Arrange for a standby
letter of credit to be issued by your
credit-worthy house bank with the
US-based bank as beneficiary. The
U.S.-based bank then extends credit
with this house bank support.

While the most costly alternative
might be the last option, this option
is one that I used most often as
a banker in situations where the
desire was to have a credit facility
put in place in short order. Banks
will often acknowledge the extra
cost the parent is sustaining for the
L/C and may reduce their lending
rates to better reflect the risk of
the issuing bank versus the risk
associated with either the local
operation or parent.
It is very common, after a couple
of years of successful operation,
for a foreign-owned subsidiary
to seek or consider supplemental
local financing. At this stage, local
area banks may be able to provide
“secured financing,” with no formal
reliance on the parent. While more
expensive, this provides the local
operation with some additional
funding alternatives and gives it a
bit of independence as it grows.
Credit extension by the banks might
be supported with the bank taking
a secured interest in receivables,
inventory, lien-free buildings or land.
Most banks also indicated that in
addition to the business financing
needs, they are eager to discuss and
find ways to assist with the personal
financing needs of the key officers
locating to the region. Each situation
is unique, and virtually all the banks
want to work with those locating
here to find workable solutions.
USA FDI NEWS (CONT.)
HOW DO I FINANCE MY U.S.
FACILITY INVESTMENT?
– By Brian Fulk, Senior Vice President of Business Development, Greater Richmond Partnership
4 |
BEST ADVICE?
“Pick your support partners
carefully, and have conversations
early in the process.” The Greater
Richmond Partnership’s Global
Assistance Program http://www.
grpva.com/files/GAP_4pgr.pdf can
provide free and early access to
the various support entities you
will want to speak with should
the Richmond region be on your
location list.
In selecting a bank partner, be
sure that the bank selected can
properly deal with incoming
foreign wires. Some banks (for
example, a direct correspondent
to the parent company’s bank)
do this much better than others.
You do not want to spend hours
trying to track down the status of
your money transfer. In addition,
while I recommend establishing a
relationship with more than one
bank, your bank for international
affairs should also be able to offer
a good information reporting
system, allowing your authorized
parent officers the ability to see or
monitor account activities here.
How do I Finance my U.S. Facility Investment? (cont.)
About the Author
Brian Fulk is Senior Vice President of Business Development with the Greater Richmond
Partnership. Brian holds a bachelor’s degree in Economics from Guilford College, and
an MBA from Wake Forest University. He is a member of the International Economic
Development Council and the Virginia Economic Developers Association. Brian and his
wife, Deborah, live in Richmond, Virginia.
Brian may be reached at bfulk@grpva.com. For more information about the Greater
Richmond Partnership, please visit www.grpva.com.
5 |
RECENT FDI SUCCESS STORIES
ITALIAN COMPANY PICKS
SOUTH CAROLINA FOR FIRST
U.S. FACILITY
BUSCOTT LLC announced
plans on Feb. 3 to locate its first
U.S. manufacturing facility in
Walterboro, S.C., which is about 50
miles west of Charleston. BUSCOTT,
which is based in Varisella, Italy, is
a producer of specialty bearings
such as flanges, turned washers and
turned rings for precision ball and
roller bearings. They are investing
$1.15 million in the project, which
will create 10 new jobs. They expect
to begin production in 2016. –
http://sccommerce.com/news/press-
releases/buscot-llc-establishing-
operations-colleton-county

VIRGINIA ATTRACTS FOUR
EUROPEAN COMPANIES
On March 15, Governor McAuliffe
announced that ELDOR
Corporation, an Italian-based
automotive manufacturer, will
invest $75 million to establish its
first U.S. production company in
Botetourt County. The project will
create 350 new jobs in the county.
Governor McAuliffe approved
a $3.2 million grant from the
Commonwealth’s Opportunity Fund
to assist the County in landing the
project. ELDOR is a global leader
in the production of automotive
parts, including ignition systems,
engine control units and braking
system actuators, among others.
– http://yesvirginia.org/AboutUs/
NewsItem/1479
In February, Polykon
Manufacturing announced
an investment of more than
$60 million to establish a
manufacturing operation in
Henrico County. The operation is
part of a joint venture between
two French companies – Seppic,
Inc. and Schülke Inc – that will
create approximately 50 new jobs
in Henrico’s White Oak Technology
Park. Polykon will manufacture
ingredients for the cosmetics
and pharmaceutical industries.
The operation is expected to
begin manufacturing ingredients
in the early 2018. – http://
www.yesvirginia.org/AboutUs/
NewsItem/1470
Starsprings – a spring and
spring-unit manufacturer based
in Sweden – announced plans in
January to establish its first U.S.
manufacturing plant in Henry
County, which includes the city
of Martinsville. The company,
will invest $3.7 million in the
facility and create 68 new jobs.
Headquartered in Herrljunga,
Sweden, Starsprings is the leading
manufacturer in Scandinavia of
spring units for excellent bed and
seat comfort. They have operations
in Sweden, Brazil and Poland. –
http://www.yesvirginia.org/AboutUs/
NewsItem/1449
In December, TAG America Inc.,
a subsidiary of TAG Chemicals
GmbH, announced plans to build
its first U.S. manufacturing facility
in Virginia Beach. TAG America
will invest $700,000 in the facility,
which will create 15 new jobs. The
company – which is headquartered
in Bischofsheim, Germany –
produces water-based, non-toxic,
specialty chemicals such as agent
releasers for a variety of industries.
– http://www.yesvirginiabeach.
com/media/news-releases/
germany-based-tag-america-inc-
selects-virginia-beach-for-first-us-
manufacturing-facility

BRAZILIAN LOGISTICS
COMPANY RELOCATES
HEADQUARTERS TO GEORGIA
Merchant e-Solutions, a
logistics firm focused on payment
processing, announced plans in
January to relocate its corporate
How do I Finance my U.S. Facility Investment? (cont.)
USA FDI NEWS (CONT.)
6 |
FDI LEGAL UPDATES
Breaking News
FOREIGN INVESTMENT IN U.S. REAL PROPERTY
TAX REFORMS
The Protecting Americans from Tax Hikes Act of 2015
(“PATH Act”), signed into law on Dec. 18, 2015 by
President Obama, creates an exception so that “qualified
foreign pension funds” are no longer subject to certain
tax and withholding rules under the Foreign Investment
in Real Property Tax Act of 1980 (“FIRPTA”), as amended.
The FIRPTA rules generally provide that foreign individuals
and corporations will be subject to U.S. income tax on
gain from the disposition of U.S. real property interests
and that the purchaser must withhold 15 percent (up
from 10 percent prior to the PATH Act) of the amount
to be realized by the foreign seller on the disposition
of such U.S. real property interests. “Qualified foreign
pension funds” should no longer be subject to the
special tax and withholding provisions under FIRPTA and
should be able to more freely invest in U.S. real estate
and certain corporations holding U.S. real estate. What
qualifies as a “qualified foreign pension fund” is defined
at Section 897(l) of the Internal Revenue Code and
notably does not include (among others) a fund in which
any single participant or beneficiary has a right to more
than five percent of the fund’s assets or income. Another
FIRPTA reform under the PATH Act allows all foreign
investors, not just qualified foreign pension funds, to
own up to 10 percent of a publicly traded class of stock
in a U.S. real estate investment trust (“REIT”) without
such stock being treated as U.S. real property holding
interests held by that investor upon a disposition of such
stock. For the anticipated business impact of the FIRPTA
changes, please see http://www.bloomberg.com/news/
articles/2015-12-18/u-s-poised-to-lift-35-year-old-real-
estate-tax-on-foreigners.
headquarters from the Silicon
Valley to just outside of Atlanta.
The company will invest $5 million
to create more than 140 new jobs.
Merchant e-Solutions is a division of
Cielo S.A., which is headquartered
in Brazil and is Latin American’s
leader in electronic payment
solutions. Merchant e-Solutions
provides a technology platform
to support the needs of various
merchant segments, including small
businesses, B2B wholesalers and
global e-commerce companies. –
http://www.georgia.org/newsroom/
press-releases/merchant-e-solutions-
to-create-more-than-140-jobs-in-
metro-atlanta/
GERMAN MANUFACTURER
SELECTS GEORGIA FOR
FIRST U.S. FACILITY
In January, LINDE+WIEMANN,
a German-based manufacturer of
complex structural steel systems,
announced plans to establish its
first U.S. manufacturing facility in
Hart County, Ga. The facility will
create approximately 250 new jobs
with an investment of more than
$35 million. LINDE + WIEMANN
specializes in manufacturing and
assembling engineered steel
systems mounted in motor vehicles.
The proposed facility will supply
several customers, including a
nearby BMW manufacturing plant
in South Carolina. – http://www.
georgia.org/newsroom/press-
releases/linde-wiemann-to-create-
200-new-jobs-will-invest-more-than-
35m-in-hart-county/
Recent FDI Success Stories (cont.)
7 |
NEW RESTRICTIONS ON BUSINESS TRAVEL TO
THE U.S.
On Jan. 22, 2016 the U.S. Department of State,
Bureau of Consular Affairs, published its first Official
Notice governing implementation of the Visa Waiver
Program Improvement and Terrorist Travel Prevention
Act of 2015. The result: The Visa Waiver Program
(VWP) permitting visits for 90 days without a visa
cannot be used by citizens of any of the 38 Visa
Waiver Program (VWP) countries (France, Germany,
Japan, etc.) who are also either nationals of Iran, Iraq,
Sudan or Syria or who have traveled since March
1, 2011 to Iraq, Sudan, Iran or Syria. Over 16,000
persons previously registered under ESTA who were
using the VWP have had their registrations revoked.
The alternative: apply for a B-1 Business Visitor Visa
at the U.S. Consulate in your home country. For more
information, please click on the following link: http://
www.williamsmullen.com/news/us-state-dept-advises-
new-restrictions-business-travel-usa. For information on
obtaining a waiver or exceptions to these restrictions,
please see http://www.williamsmullen.com/news/
exceptions-restrictions-using-visa-waiver-program-vwp.
RECENT CHANGES TO EU COMMUNITY
TRADEMARKS MAY IMPACT INTERNATIONAL
TRADEMARK OWNERS
Enforcement of U.S. and European Union trademarks
is always of concern to international businesses. On
March 23, 2016, Regulation (EU) 2015/2424 of the
European Parliament and of the Council will take
effect, introducing changes to the process for applying
for and maintaining Community Trade Mark (CTM)
registrations in the European Union. Many changes will
have a significant impact on international trademark
owners, affecting the cost of applications as well as the
standards for acceptable goods and services descriptions.
Companies with CTM applications and registrations
should carefully review their trademark portfolios
to determine the effect of the new changes on the
scope of their rights and their filing and protection of
trademarks in the U.S. For more details see http://www.
williamsmullen.com/news/recent-changes-community-
trade-mark-may-impact-international-trademark-
owners.
KEY EXPORT COMPLIANCE ISSUES FOR 2016
Tom McVey, Chair of the International Section at
Williams Mullen, offers five strategic issues to be
considered in the export compliance area. Recent
developments include country amendments dealing with
trade with Iran and Cuba, changes in cybersecurity and
export violations, high risk transactions, personal liability
for export violations and more. These changes impact
U.S. companies and foreign companies whose U.S.
subsidiaries export from the USA their products, services
or technical data. To access Tom’s alert, please click on
the following link: http://www.williamsmullen.com/
news/key-export-compliance-issues-2016.
AFFORDABLE CARE ACT (ACA) COMPLIANCE
UPDATE FOR 2016
Foreign companies with operations in the U.S. can
follow ACA requirements by reading an alert prepared
by Brydon DeWitt, a partner in the Employee Benefits
Section at Williams Mullen, that addresses the employer
mandate, reporting health coverage and coverage of
preventive care, to name but a few topics. To read
Brydon’s alert, please click on the following link: http://
www.williamsmullen.com/news/affordable-care-act-
compliance-update-2016.
ENVIRONMENTAL NOTES – FEBRUARY 2016
Environmental law enforcement has been a hot news
topic in the U.S. after the Flint, Mich. scandal involving
lead contamination of the drinking water. For the latest
developments nationwide affecting environmental
enforcement, please see our latest Environmental Notes
at http://www.williamsmullen.com/news/environmental-
notes-february-2016.
FDI Legal Updates (cont.)Recent FDI Success Stories (cont.)
USA FDI NEWS (CONT.)
8 |
WILLIAMS MULLEN
Authors/Editors/Contacts
Eliot Norman has focused his practice
on immigration law and Foreign Direct
Investment since 1995. He is a graduate
of Yale College and Boston College Law
School (cum laude). Eliot holds a Certificat
from the Institut d’etudes politiques,
Paris, France and speaks French fluently.
Eliot Norman
Editor, Williams Mullen
Partner-International
Immigration FDI
+1.804.420.6482
enorman@williamsmullen.com
Robert B. Hamlett, Jr.
Tax
+1.804.420.6230
bhamlett@williamsmullen.com
Brydon M. DeWitt
Employee Benefits & Executive
Compensation
+1.804.420.6917
bdewitt@williamsmullen.com
Brian Fulk
Senior Vice President of
Business Development
Greater Richmond
Partnership
bfulk@grpva.com
Thomas B. McVey
ITAR, Export Controls
+1.202.293.8118
tmcvey@williamsmullen.com
UPCOMING
EVENTS:
(with participation of Williams
Mullen attorneys as speakers)
MARCH 26, 2016
The USA IT Market for European
Companies
Digital Place Cluster
Toulouse, France
http://www.williamsmullen.com/
events/usa-market-opportuni-
ties-it-companies
APRIL 14-15, 2-16
2016 Aerospace & Defense
Supplier Summit
Seatle, WA
Williams Mullen will present
on ITAR and IP issues.
http://seattle.bciaerospace.com/sign-
up.html

MAY 18-19, 2016
French-American Business Week
French Embassy, Washington, DC
http://selectusa.commerce.gov/
events/fabw2016.html
JUNE 19-21, 2016
SELECTUSA Investment Summit
“The Innovation Advantage”
Williams Mullen plans to present
on IP issues for FDI projects see
http://tinyurl.com/jb87xlb. For
complete information about
the summit see http://selectusa.
commerce.gov/2016-summit.html
Contributors
Hadeel Abouhasira
Immigration
+1.804.420.6452
habouhasira@williamsmullen.com
Martin W. Hayes
IP & Trademarks
+1.703.760.5245
mhayes@williamsmullen.com
Ryan W. Trail
Environmental
+1.803.567.4605
rtrail@williamsmullen.com
Rebecca S. Winder
IP & Trademarks
+1.804.420.6479
rwinder@williamsmullen.com

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