Williams Mullen FDI USA Newsletter – June 2015

– In this Issue:

– Welcome

– About Us

– Results Of 2015 SelectUSA Summit

– 2015 Upcoming Events

– RAISING CAPITAL: Simplifying the U.S. Capital Markets

– Recent FDI Success Stories

– FDI Legal Updates

– Excerpt from Results Of 2015 SelectUSA Summit: SelectUSA reported that: “By all accounts, the 2015 SelectUSA Investment Summit hosted by President Barack Obama on March 23-24 was a tremendous success.” We agree.

Please see full Newsletter below for more information.

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williams mullen
FDi usa newsletter
welcome
We hope this first issue of our FDI (Foreign Direct Investment) USA
Newsletter will be of interest to you, and we welcome your readership.
Many of you attended the SelectUSA FDI Summit in Washington D.C.
or are making plans to expand your business in the USA. Each quarter
this Newsletter will highlight some of the FAQs that arise from such
projects—from how to finance a deal to selecting the right visa or tax
strategy and more. Please email your suggestions for future topics to
enorman@williamsmullen.com. We want to keep this Newsletter
interactive and relevant to your international business.
about us
Founded in 1909, our firm has
225 attorneys, a national and
international practice, and a
particular focus on representing
foreign companies in connection
with their direct investments in
the United States, whether by
acquisition (M&A), joint venture
or the setting up of a U.S.
subsidiary. Our offices are located
in Washington, D.C., Virginia, North
Carolina and South Carolina. Given
the size and experience of our firm,
Williams Mullen can provide the full
range of commercial legal services–
from intellectual property
to corporate tax matters to visa
strategies and more–to meet the
needs of global businesses.
www.williamsmullen.com/FDI
insiDe
Results Of 2015
selectusA summit
– Washington, D.C. March 22-24 2015,
by Eliot Norman, Partner, Williams Mullen
SelectUSA reported that: “By all
accounts, the 2015 SelectUSA
Investment Summit hosted by
President Barack Obama on March
23-24 was a tremendous success.”
We agree.
continue on page 2
RAisiNG cAPitAl: simPlifyiNG
the u.s. cAPitAl mARkets
– Justin Marriott, Managing Director
Marriott & Co.
From time to time, your business
may need to raise capital for a
number of reasons, including to
fund growth, the development of
new products…
continue on page 3
ReceNt fDi success stORies
Promac (Italy), APAG elektronik
(Switzerland) and mavalerio (Brazil)
announce FDI plans…
continue on page 4
fDi leGAl uPDAtes
Williams Mullen updates FDI FAQ
to provide expanded coverage
of tax issues for U.S. subsidiaries.
continue on page 5
Eliot Norman, Attorney and Editor
enorman@williamsmullen.com
2 |
results oF 2015
selectusa summit
– Washington, D.C. March 22-24 2015, by Eliot Norman, Partner, Williams Mullen
SelectUSA reported that: “By all accounts, the 2015 SelectUSA Investment
Summit hosted by President Barack Obama on March 23-24 was a
tremendous success.” We agree.
Williams Mullen sent three of its Economic Development and FDI partners
to the event, and we were among more than 2600 participants. By our
count, more than 750 foreign business and corporate representatives from
more than 70 international markets attended. We felt the enthusiasm,
whether in matchmaking meetings, on the exhibit floor, or at any of the
many presentations.
President Obama gave the keynote address and announced a number of
changes affecting FDI, including new immigration regulations. We met a
number of U.S. Ambassadors who accompanied delegations from China,
France, Sweden, Italy and other countries to the summit. In all, 50 U.S.
Ambassadors attended.
Key topics covered included investor visas, workforce development, how
to invest in infrastructure and advanced manufacturing. I was particularly
impressed by the presentation of Eric Schmidt, Executive Chairman of
Google, who explained with case examples why the United States is open
to innovation and the advantages of a transparent U.S. economy for
Start-up companies with new technologies.
I attended follow-on meetings with investors from Greece and France,
including a reception at the French Embassy. Several commented
that because of the Summit and their meetings with U.S. Economic
Development Agencies that they had made the decision to set up
operations in the United States.
FDI uSA newSletter – june 2015
2015
uPcominG
eVents:
Eliot Norman, Williams Mullen
will speak at this event:

OctOBeR
national Aerospace
FDI exposition
October 26 – 28, 2015
Los Angeles, CA

JuNe
SelectuSA at BIO 2015
June 15 – 18, 2015
Philadelphia, PA

SelectuSA at the International
Franchise expo
June 18 – 20, 2015
New York, NY
July
u.S. Business Seminars in japan
July 16 – 17, 2015
Takamatsu, Hiroshima
AuGust
SelectuSA taiwan road Show
August 5 – 6, 2015
Taipei and Kaohsiung, Taiwan
sePtemBeR
SelectuSA nordic road Show
September 14 – 21, 2015
Oslo, Copenhagen/Malmo, Gothen-
burg, Stockholm, Helsinki, Tallinn
OctOBeR
SelectuSA India road Show
October 13 – 15, 2015
New Delhi, Mumbai, Chennai
3 |
FDI uSA newSletter – june 2015
raisinG caPital: simPliFyinG
the u.s. caPital markets
– Justin Marriott, Managing Director, Marriott & Co.
From time to time, your business
may need to raise capital for a
number of reasons, including to
fund growth, the development of
new products, general corporate
and working capital needs,
equipment purchases, acquisitions,
shareholder dividends, and many
others. However, raising capital
is a costly endeavor that requires
careful consideration to determine
the appropriate form for your
business. These costs can be both
tangible (i.e. interest rates, fees,
etc.) and intangible (i.e. time,
resources, loss of control, etc). This
article will provide a look into the
varieties of capital available, which
may be ideal based on the unique
situation and characteristics of
your business.
The cheapest source of financing
is senior debt, which is the most
senior source of capital and carries
with it the lowest interest rate.
Senior debt is secured by the assets
of the business. Additionally, this
form of debt grants the lender first
lien on the assets of the business,
meaning that, in the event of
liquidation, senior debtholders will
be repaid before any other debt
or equity holders. Common types
of senior debt include term loans
and lines of credit. The available
amount of secured debt that a
lender will provide depends on the
size and quality of your company’s
assets such as property, equipment,
inventory, accounts receivable, etc.
A senior debt facility will include
well-defined covenants that a
business will have to comply with
at the penalty of default. Common
covenants include liquidity ratios
like total debt to cash flow, fixed
charge coverage, interest coverage,
and more.
After senior debt, subordinated
debt-holders will have a secondary
claim to a company’s assets.
Subordinated debt can be
structured in many different
ways. Mezzanine debt is a
form of subordinated debt that
has a higher interest rate and
may contain embedded equity
options or warrants, making it
a costlier form of capital. In this
arrangement, the debtholder has
the option to acquire equity in the
company under a method that is
defined within the loan documents.
Additionally, subordinated debt
lenders will provide unitranche
financing, where one lender may
provide a combination of senior
and subordinated debt that is
blended into one security that has
a higher interest rate than senior
debt but has equity warrants.
Beyond debt, capital can also be
raised through the issuance of
equity. The two most common
forms are preferred stock and
common stock. Preferred stock
holders are senior to common
investors, meaning that, in
liquidation, preferred investors
will receive compensation before
common investors. However, in
both cases, equity holders will
only receive payment after all
debtholders have been indemnified.
Raising capital through equity
generally carries higher fees than
raising debt, making it more
expensive. Additionally, you
dilute the ownership structure by
bringing on an outside investor
who will share in the economic
rights of your company and can
often gain a presence on the board
of directors. However, an equity
investor will generally not impose
the strict covenants and controls
that many lenders do.
If you are in need of capital for
any of the reasons outlined above,
Marriott & Co. has significant
experience advising privately-held
companies in raising both debt
and equity capital between $5
million and $20 million. For more
information on Marriott & Co.’s
customized approach to capital
raise assignments and its proven
track record, please contact justin
Marriott, Managing Director
at justin@marriott-co.com.
4 |
recent FDi success stories
michiGAN cONfiRmeD twO
iNvestmeNts fOllOwiNG the
2015 selectusA iNvestmeNt
summit
> Promac, an Italian-based
automotive supplier, plans to
open its first North American
facility in Troy. The company
produces parts for many
industries, including aviation,
aerospace, energy, precision
prototypes, and complex
machining.
> APAG Elektronik AG is a Zurich,
Switzerland-based electronics
design and manufacturing firm.
The company confirmed plans
to open a sales office in Troy in
mid-2015, and is considering
an electronics manufacturing
facility in 2016.
vOlvO ANNOuNces
fiRst u.s. AutO fActORy
iN sOuth cAROliNA
May 11, 2015: This $500 million
investment should create FDI
opportunities for Tier 1 and Tier
2 suppliers already doing business
with Volvo in Europe and China.
Construction will begin this fall
so that the factory can begin
producing vehicles in 2018. See
http://tinyurl.com/ok7nbzn
NORth cAROliNA AttRActs
fDi iN mANufActuRiNG
AND textiles
March 13, 2015. Canadian-based
Peds® Legwear (PEDS) opened
its new production facility. PEDS’
recent $16 million investment in
the plant and new machinery
has allowed the company to hire
North Carolina factory workers
who were previously laid off.
By 2018, this new facility will
bring more than 200 jobs to
Hildebran, NC. SelectUSA provided
counseling to PEDS on how to
navigate the federal regulatory
process and also helped identify
sources of federal funding. In
addition to PEDS’ investment in
the Hildebran facility, the company
plans an additional $8 million
venture, bringing their total
investment in the United States to
$24 million.
viRGiNiA AttRActs
BRAZiliAN fDi
April 9, 2015:
Mavalério, a Brazilian
manufacturer of
candy and other
confectionary
products, will
invest $5 million to
establish its first U.S.
production operation
in Hanover County.
The project will create
55 new jobs. The
location of this new
operation will help
the company grow its
footprint in the U.S.
market.
Mavalério, founded
in 1969 and based
in Sao Paulo, Brazil, is the
largest producer of decorative
confectionery in Latin America,
currently exporting to more
than 20 countries. According
to Fernando Bettin, Mavalério
director of operations: “We have
chosen the state of Virginia
because we can reach 55 percent
of the U.S. population within
750 miles, and we couldn’t be
more pleased with our location
As a manufacturer of sugar
confectionery toppings, interstate,
port and airport access are critical
to maintain our supply chain.”
chiNese fDi iN the usA
A new study reports that Chinese
companies have invested $46
billion in the US since 2000.
FDI uSA newSletter – juune 2015
A Volvo factory in Chengdu, China.
The automaker is hoping to increase
its American sales volume, after an 8
percent decline last year from 2013.
Credit Ng Han Guan/Associated Press
5 |
wIllIAMS Mullen
contact us
Eliot Norman has focused his practice on immigration law and FDI
(Foreign Direct Investment) since 1995. He will be speaking at the FDI
Aerospace Summit in Los Angeles on October 26-28 on negotiating
supply contracts, investment visas and incorporation of U.S.
subsidiaries. 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.
For further information on the topics in this FDI newsletter you may
wish to contact Mr. Norman at enorman@williamsmullen.com.
eliot norman
Partner-International
Immigration FDI
T: 804.420.6482
enorman@williamsmullen.com
FDi leGal uPDates
tAx
Williams Mullen updates 10 FAQ for Establishing
Operations in the United States. We now provide
expanded coverage of tax issues in our Answer
to Question #4: What Taxes will the U.S.
Subsidiary Corporation Pay?
www.williamsmullen.com/news/10FAQS
visAs
Foreign companies typically use the L-1B to transfer key
personnel from overseas to help establish or expand
the operations of their U.S. subsidiaries. As announced
by President Obama at the Summit, USCIS has issued
a Draft Memorandum to be effective August 31, 2015.
It should provide clearer standards for the criteria for
deciding nonimmigrant petitions for L-1B Specialized
Knowledge employee transfers.
For our Williams Mullen quick guide to investor and
business visas – B-1, H-1B, L-1 and E-1/E-2 and more, visit
www.williamsmullen.com/visa-guide
emPlOymeNt lAw
Foreign companies establishing U.S. subsidiaries can
benefit from more liberal employment laws that allow
employment “at will.” That is, employers are generally
free to terminate the employment relationship with an
employee for any or no reason at all, with or without
notice, and without the requirement of severance
pay. However, terminations must not violate any of
a number of federal and state statutes prohibiting
employment discrimination on numerous protected
characteristics—race, sex, age, disability, religion, etc.
With respect to disability discrimination, a Federal
Court of Appeals recently reconfirmed what many
employers have long suspected–almost all physical
and mental impairments will meet the definition of
“disability” under the Americans with Disabilities
Act (ADA). Thus, companies are required to provide
reasonable accommodations to a larger number of
workers. www.williamsmullen.com/news/americans-
with-disabilities-act
OBAmA cARe
More employers will soon be subject to the mandates
of the Affordable Care Act. Beginning January 1,
2016, if your U.S. company employed on average
at least 50 full-time workers during 2015, you must
provide private “affordable” health care insurance that
meets certain “minimum value” requirements. Failure
to comply with the “pay or play” rules can result in
penalties in the thousands of dollars annually for
either not filing the right IRS forms or for failing to
provide health care coverage or both.
www.williamsmullen.com/newsletter/obama-care

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