EDC Corporate Presentation by Levone


									EDC Presentation MISTIC
June 2007

Who is EDC

EDC is the only Canadian financial institution devoted exclusively to providing trade finance services in support of Canadian exporters and investors in up to 200 countries. Founded in 1944, EDC is a Crown corporation that

operates as a commercial financial institution.


EDC support for Exporters

● Risk Management through Export Credit Insurance ● Collateral for Working Capital Lines of Credit

● Guarantees to Banks


What is Accounts Receivable Insurance?
Accounts Receivable Insurance (ARI) covers exporters

against non payment of their export receivables

• Covers credit sales • Standard cover 90% • Bankruptcy • Default • Political Risks

Benefits of Accounts Receivable Insurance
1. Covers 90% of losses when foreign buyers don’t pay
2. Helps increase access to working capital (Credit enhances foreign receivables making them more attractive to lenders.)


Benefits of Accounts Receivable Insurance (cont’d)
3. Allows exporters to offer more flexible payment terms with EDC- backed credit decisions
4. Helps exporters to break into new markets around the world 5. Provides on-going access to EDC’s market/buyer intelligence


Financing Solutions for Exporters


Exporter Guarantee Program


Master Accounts Receivable
Guarantee (MARG)

III. Contract Bonding


Exporter Guarantee Program
 A risk sharing guarantee designed to encourage Financial Institutions to advance loans to smaller exporters by providing additional security  Guarantee covers up to 75% of loan for operating loan facility.  Existing operating lines of credit are not affected.  There are no add-on fees payable to EDC  Financial Institution is responsible for funding and perfecting security


Exporter Guarantee Program
● Pre-shipment loans can be used to cover WIP financing needs for direct exports as well as indirect (i.e. component sub-supply in Canada related to a product that is ultimately exported). ● Approved Pre-shipment loans can be up to 100% of the contact costs. ● The term of the loan is linked to the payment terms identified in the commercial contract.

Variations of support: ● Contract Specific (pre-shipment) – One-off or “Bulge” facility to specifically support an export contract.

Exporter Guarantee Program
Variations of support: ● Revolving Facility (pre-shipment) – specifically support a series of purchase orders or contracts. ● Operating Facility – A general corporate purpose facility to be administered by the provider in support of day to day operational activities. Maximum 50% guarantee. ● Term Loan Facility- Maximum 50% guarantees. o Infrastructure investment in Canada relating to specific existing export contracts; o Infrastructure investment in Canada relating to general corporate purpose financing; and o Foreign Direct Investment Out to support the acquisition of a foreign asset or company.


Bank Instruments that Guarantee Contract Performance
Performance Security Guarantee (PSG)... 100% guarantee to the bank against any call frees up working capital funds

Account PSG (A-PSG) … PSG facility for frequent issuers of export bank instruments Pre-approved, pre-committed capacity

II. Bank Instruments that Guarantee Contract Performance (cont’d)
Performance Security Insurance (PSI)... 95% coverage to the exporter against: Wrongful call of a bank instrument, and Rightful call outside of exporter’s control


Master Accounts Receivable Guarantee
● ● ● ● The MARG is a guarantee on a Bank line of Credit. Maximum line of CDN$500,000 or US$350,000 Exporters with sales up to CDN $25 million Coverage  EDC Guarantees 90% of the Line of Credit.  The MARG is based on the value of outstanding Export Receivables.  MARG is a low cost guarantee with one time fee for a year. ● No additional administration from bank  Bank can take additional security  MARG can be used on a separate or combined line


Master Accounts Receivable Guarantee

What accounts receivables are eligible?

Foreign receivables sold on max. credit terms of 180 days and not more than 150 days overdue
Sales to related companies are excluded Sole purpose entities selling to one buyer or country are not eligible Exports to Iraq, Angola and Myanmar are excluded

 

 

Bank participants: CIBC, BNS, BMO, TD, Banque Nationale, Caisse Desjardins, Laurentian, HSBC, Assiniboine Credit Union and Alberta Treasury


Why does MARG Exist?

Access to operating lines of credit can be a major concern for growing Exporters Banks typically do not use receivables as security for small lending (<CDN 250K)
 As

a niche product, MARG appeals to slightly larger lending (Av. line is CDN 288K)


MARG is a simple and easy solution for exporters requiring financial support from a bank for the financing of their export growth


Who Can Benefit?
MARG is ideally suited to the exporter who:
● Needs or wants financing; ● Wants to open or increase a line with the bank; and, ● Is not concerned about buyer non-payment.

MARG is ideally suited to the banker who:
● Wants to do more business with the exporter; but, ● Prefers to offer financing in a more secure environment.


Questions? Call
Bruce Stanton
604-638-6944 bstanton@edc.ca


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