EDC AS A PARTNER - Cumberland Business Connector...–$100K cash tied up for length of contract...

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EDC AS A PARTNER

• Canada’s Export Credit Agency

• Crown corporation wholly owned by the Government of Canada

• Financially self-sustaining, operate on commercial principles

• Support traditional exports, service-based exports and companies selling into global supply chains

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INSURANCE

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INSURANCE SOLUTIONS

CREDIT INSURANCE

POLITICAL RISK INSURANCE

Benefits

• Leverage insured account receivables for working capital

• Offer more competitive terms to your customers

• Mitigate risk of non-payment/market risk

CREDIT INSURANCE

• Protects your profits and balance sheet

• Reduces risk by covering your receivables at up to 90%

• Allows you to be more competitive by offering better payment terms to your customers

• Increases access to working capital

• Flexible options (portfolio or selective coverage)

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Risks covered:

• Default

• Bankruptcy

• Repudiation

• Political Risk

• Export & Import restrictions

• Contract cancellation

CREDIT INSURANCE OPTIONS

Risks excluded:

• Disputes

• Sales to individuals or related buyers (i.e. intercompany sales)

• Shipments or contracts entered into when buyer defaults

• Misrepresentation

• Corruption

• Change in payment terms or contract assignment without EDC consent

CREDIT INSURANCE CASE STUDY

Jen owns a successful Canadian sporting goods company and has started to receive interest from potential customers in the U.S. and abroad. These prospective customers are asking for payment terms.

She knows that to increase her sales and brand, she needs to explore these markets.

• Jen’s concerns

– Am I going to get paid?

– How am I going to finance it?

• Solution

– EDC Portfolio Credit Insurance with coverage at 90%. Her bank will now lend against foreign receivables at 90%.

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POLITICAL RISK INSURANCE

• Protect your valuable overseas assets and investments at 90%

• Coverage for a wide range of political risks:

– Creeping or outright expropriation

– Political violence

– Currency conversion

– Repossession of your assets

– Non-payment by a government

POLITICAL RISK INSURANCE

John’s company will be starting on a three-month contract in Mexico. To fulfill the contract, he’ll be bringing two large pieces of equipment.

• John’s concerns

– Political violence–potential damage to equipment

– Not being able to get his valuable equipment back into Canada

• Solution

– Political Risk Insurance–Asset Coverage for 90% of the equipment value

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BONDING SOLUTIONS

BONDING SOLUTIONS

100% EDC GUARANTEE TO YOUR FINANCIAL INSTITUTION TO SUPPORT

• Issuing various performance and financial letters of guarantee/standby letters of credit

• Foreign exchange facilities

Benefits

• Bonding ties up your workingcapital and operating loans when cash flow is needed most.

• Many growing companies lack the asset base to secure LC/LGs that come along with international contracts.

BONDING SOLUTION CASE STUDY

Jim has won a $1M contract in the United States that requires a 10% performance bond (letter of guarantee/standby letter of credit).

Jim speaks to his bank, and they tell him that he’ll need to post cash as collateral in order to issue the bond.

• Jim’s concerns

– $100K cash tied up for length of contract

– Working capital constraints could impede new opportunities.

• Solution

– Account Performance Security Guarantee: EDC provides his bank with a 100% guarantee, removing the collateral requirement.

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FINANCING

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FINANCING SOLUTIONS

Flexible solutions supporting a number of financing needs:

• Pre-shipment or work-in-progress financing

• Operating line or an increase to a current operating line

• Financing of a foreign affiliate or subsidiary

• Foreign inventory or equipment

• Foreign acquisitions

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EXPORT GUARANTEE PROGRAM

Benefits

• Increased access to capital

• Facilitated international expansion

• Complement your existing bank relationship

FINANCING GUARANTEES

TO YOUR FINANCIAL

INSTITUTION

• Risk-sharing approach

• Flexible structure

• Risk appetite for business conducted outside of Canada

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DIRECT LENDING

• EDC can consider a direct-lending structure to fill a gap and/or add lending capacity.

• Lending support provided on non-competitive, partnership-preferred basis

• Priced to risk and market

• Potential Structures:

– Syndicated facilities

– Club facilities

– Bilateral term loans (generally used for purchase orders and CapEx)

DIRECT LOANS (WITH EDC AS LENDER)

FINANCING CASE STUDY

Jill’s apparel company has won their largest contract to date in Australia. This contract would double the company’s revenue and provide opportunity to grow a new market.

• Jill’s Challenge

– 30-day payment terms from delivery will mean working capital constraints.

– Pre-shipment financing

• Solution

– Export Guarantee Program: EDC works with Jill’s bank to provide them with a risk-sharing guarantee. By partnering with EDC, her bank can advance financing to cover pre-shipment costs.

KNOWLEDGE SOLUTIONS & ADVISORY SERVICES

Webinars & Trade Information

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KNOWLEDGE SOLUTIONS

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QUESTIONS?

TAREK AL-OWAISHI, MBA

Account Manager

T: 902-450-7602

C: 902-266-9765

Tal-owaishi@edc.ca