Private Capital and Indian Country Opportunity Overview * 556 Federally recognized tribes in the US. 227 or 41% are Alaskan Native Corporations Economic Profile (BIA Census Data 1999) * Total Tribal Enrollment 1,698,483 (3% increase from 1997) * Total U.S. population 281.4 million - .6$ of U.S. population * Employment statistics o Unemployed rate 43% (7.67 x greater than national average) o Employed but below poverty guidelines 33% o Most recent census data report per capita income on Indian reservations is $4,478 Vs U.S. per capita income of $14,420 Population by Region 43% West 17% Midwestern 31% South 9% Northeast 1/3 live on the reservation, 1/3 in central cities, 1/3 in suburbs Population Characteristics * Median age 28 years Vs 36 for U.S. s a whole * 28.1% births per 1,000, 1.68 times U.S. national average * 54% born to unwed mothers Vs 17% for Caucasians Government Characteristics * Tribes are federally recognized by treaty, executive order, and in the case of Alaska natives - the Alaska Native Settlement claims act of 1971 * Sovereign status in essence - countries within a country * Each tribe has distinctively different governmental and legal characteristics * Governmental decisioning while similar, in unique to each tribe * Judicial infrastructures vary from comprehensive to non existent Governmental missions share the aspirations to: * Protect the real and private property rights of the tribe and individual members * Provide for the health, education, social, economic well being of members * Develop and implement economic strategies to enhance economic platform, improve unemployment statistics, attract tribal and private sector business Bureau of Indian Affairs " In the last two centuries the Congress has passed more federal laws affecting Indians than any other group of people". * Established in 1824 as part of the department of war by President James Madison * 1832 Congress authorizes the president to appoint a commissioner of Indian Affairs * 1834 Congress enacts bill to organize a Department of Indian Affairs * 1849 BIA transferred to the newly created Interior Department * BIA mission is to "fulfill its trust responsibilities and promote self determination on behalf of tribal governments, American Indians, and Alaska Native". * 2003 BIA Budget request $2.3 billion up from $2.297 billion in 2002 BIA Budget Breakdown 42% Tribal Priority 31% Indian Education 10% BIA Administration 17% Other Programs * The BIA is the fiduciary for most of Indian Country's assets and approval is required for most private sector financial arrangements with tribes (negative response/acknowledgments encouraged) Capital Access for Economic/Infrastructure Initiatives * Federal Grants o Education o Health Care o Infrastructure * Tax Exempt Debt Issuance o Infrastructure (water, sewer, roads, etc.) o Economic enterprises (except gaming) o Land acquisitions * Traditional senior debt * Private placements * Mezzanine * Equity Sample Deal Facilitated by Key * Situation N/W Tribe looking to: o Reposition existing debt o Acquire additional capital for enterprise expansion, acquisition and growth o Operate as a separate financial entity (Enterprise Corporation) wholly owned by the tribe Issues o No guaranty by Tribe o No waiver of Sovereign Immunity by Tribe o Borrowing entity - The Enterprise Corporation o Recognize tribal jurisdiction o Fixed Assets exclude real estate liens (real estate "owned by Tribe") Solution (multi-million dollar senior debt facilities 100% hold position by Key) * Revolving credit facility secured by trading assets * Term credit facility with reducing revolver feature * Collateral "Leasehold mortgage on fixed assets" o Buildings o Equipment o Cross collateralization/cross defaulted with revolver * Resource assurance agreement between Tribe and Bank * BIA approval pursuant to authority from the Secretary of the Interior * Limited waiver of sovereign immunity by borrowing entity * No waiver of sovereign immunity by Tribe o Dispute resolution facilitated by American Arbitration Association Commercial Arbitration Rules * Enforcement of AAA award in Tribal Court Conditions precedent to solution * Financial viability of borrowing entity o Appropriate balance sheet proportions (working capital, leverage, etc.) o Historical profit and loss performance (profit, free cash flow/EBITDA, etc.) * Collateral perfection * Governing laws * Legal infrastructure to facilitate the Tribal Court dispute resolution enforcement Financial Services and Solutions for Indian Country Summary Access to capital for governmental, enterprise, infrastructure, housing etc. * Traditional senior debt (conventional loans, leases) * Private placements * Mezzanine * Taxable and tax exempt bond issues (intermediate long term loans/leases) * Letters of Credit * Facilitated by single hold, or multi financial institution syndications * IHA's Investments service needs * Government * Enterprises * IIM * Individual/minor trusts Other Services * Foreign exchange * Cash Management * International * E-Commerce Key's financial service capacity and expertise combine for an idea based relationship with Indian Country Indian Tribes all have: * Unique governmental infrastructure * Unique cultures * Unique governmental status * Varied financial capacity * Shared - social and economic challenges Resource Information William (Mike) Lettig Telephone - 509-586-5244 Fax - 509-586-5248 E-mail - William_M_Lettig@keybank.com Web site - www.keybank.com BIA - DOI.GOV NCIA - NCIA.ORG ATNI - ATNITRIBES.ORG Statistical information derived from * BIA * Addressing Poverty in Indian County, NCAI presentation by Sarah Hicks * Doctrines of Discovery by Eric Cheyfitz