EDC and Turkey Focus on Small Business

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					   EDC and Turkey:
Focus on Small Business




Canadian Turkish Business Council
AGM 2004                            October 2004
                EDC - Who We Are

Established in 1944 as Canada’s export credit
agency, EDC provides trade finance and risk
management services to Canadian exporters and
investors in up to 200 markets.




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     EDC Financial Highlights (C$)

                1998    1999   2000    2001 2002     2003
Business Volume 34.7B 40.1 B 45.4B     49B 51.5B 51.9 B
Financings      6.7B    6.1B 7.66 B    8.4B   7.4B    n.a.
Assets         15.3B 19.4B     21 B 23.8B 24.6B 21.1B
Equity          1.7B    1.8B   2.0 B   2.1B 2.1B.    2.3B

Net Income     135M 118 M 194 M        58M 122M. 158M

Customers       4,183   5182   5679    6355   7223   7172
Served


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EDC Business Volume (1996 to 2003
($ billions)

   48
   44
   40
   36
   32
   28
                                             49.5   51.5   51.9
   24                                 45.4
   20                          40.1
                      34.8
   16          28.6
   12    22
    8
    4
    0
        1996 1997 1998 1999 2000 2001 2002 2003
                             Bus. Volume
                                                                  4
               EDC Customer Base
8000
                                                            6575   6527
7000                                              5722

                                          5081
6000
                                   4550


5000
                            3664

                     3243
4000

              2507
3000   2041


2000


1000

       421    444     468    519    632   598     633      648       645
  0
  1995        1996   1997   1998   1999    2000     2001    2002    2003

                Large Exporters      Small-Medium Exporters
                                                                           5
                         EDC’s Sector Teams

     EDC                                                            International
Regional Offices:                                                      Markets:
- Vancouver                 Small                   Emerging       Ottawa
- Winnipeg          Export sales < $1 million     Exporters Team
- Calgary                                                          Int’l Representations
- Toronto                                                          Beijing, Warsaw,
- London                               Large                             Centres
                                                                   Mexico, Monterrey,
- Montreal                                                         Sao Paolo, Rio de
                                                                             of
                              Export sales > $1 million
- Quebec                                                           Janiero, (Kuala
- Halifax                                                             Expertise
                                                                   Lumpur)
- Moncton
- St. John’s                                                           Centres
- Edmonton             Adv. Tech.,                 Telecom          of Expertise:
- Ottawa               Machinery &
                         Equip.                  Automotive         Project Finance
                                                                         PRI
   Base & Semi                                                           CIB
                          Mining,                  Ground             Economics
                      Infrastructure            Transportation          Equity
Consumer Goods       Dev. & Services
                                                 Aerospace
     Agri-Food             SBFS
                                                  Financial
      Forestry            Energy                 Institutions

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                             EDC Services
1) Financing
      EDC provides financing based on corporate risk, sovereign risk and
       project risk
      Pre-export financing for exporters
      Support for foreign investment based on corporate risk
2) Short Term Insurance
      EDC provides credits insurance to exporters to protect them against the
       risk that their buyers do not pay them for a variety of commercial or
       political reasons.
3) Political Risk Insurance
      EDC covers private sector investments and loans
      Coverage can be provided to equity investors and/or banks
4) Bonding Services
      EDC has variety of instruments to support bid bonds, performance
       bonds and warranty bonds                                                  7
          EDC and Turkey – Business Volume
                  (Cdn. $ millions)

 Program        2000    2001     2002     2003     August
                                                    2004
ST Ins.       228.09    78.00    133.66   61.51    103.65

MT. Ins       24.11     35.00    91.36     9.34     0.48

Fin.          47.66      0.00     1.16     8.84     2.71

PRI           9.51       4.00     0.0      0.0      0.0

Total         309.37    117.00   226.18   79.69    106.84

Total Cdn.     259.75   172.65   268.72   273.36    n.a.
Exports
                                                            8
          Canadian Trade with Turkey

CND mln
  500
  450
  400
  350
  300
                                       Export
  250
                                       Import
  200
                                       Trade Deficit
  150
  100
   50
    0
          2000   2001   2002   2003


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    Canadian Main Exports to Turkey
   Coal
   Iron ore
   Newsprint
   Wheat and other agricultural
    commodities
   Pulp
   Telecommunications equipment
   Aircraft & helicopters
   Ground transportation systems




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EDC Financing in Turkey
  1) Sovereign Lending
       EDC can consider sovereign lending. Due to IMF
        constraints, Turkish Treasury is very cautious in
        providing sovereign guarantees.
       Such guarantees critical for infrastructure projects.
  2) Municipal Government Lending
       Can consider lending to municipal governments with
        credit ratings - currently only Istanbul is rated.
       Consideration will be very cautious as many cities
        have borrowed by relied on Turkish Treasury to
        make payments.
       EDC has agreement with S&P to provide
        transaction-based credit ratings for unrated
        municipalities for transactions up to USD 5.0 mln.

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                          EDC Financing in Turkey
3) Bank Lending
EDC can work with several leading Turkish Bank
          Ak Bank                   Yapi Kredi
          Is Bank                   Garanti Bank
          Vakiflar Bank             Oyak Bank
          Financbank                Kocbank
          Disbank                   Turk Ekonomi Bankasi

4) Corporate Lending
  Companies can be considered subject to the following
  criteria:
       Financial transparency - western accounting standards
       Strong financial position
       Possible credit rating
       Good credit record


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EDC Insurance in Turkey

 EDC can provide insurance coverage for:
 1) Acceptable Turkish banks (includes previous list of
     banks under Financing section); and other banks
     such as Anadolubank, Tekstilbank
 2) Acceptable private buyers in cases where
     Information can be obtained from acceptable credit
     agencies




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EDC Support For Small Business in Turkey -
               Highlights
 Financing
    Five financing deals since 2001 ranging from US 106,000 to
     USD 3.0 mln.
    All loans directly with buyer. Two guaranteed by owner and
     one by bank

 Insurance
    In 2004 to date EDC has supported approximately 47 exporters
     to Turkey.
    Approximately 41 were SME’s with average size deal of Cdn.
     $171,000.
    Total ST Insurance - $103.65 mln.
            DCIP - $89.1 mln.; Coverage of L/C’s for Canadian banks
            Open Account – $14.55 mln. Coverage for exporters




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  Specific EDC Programs to Support SME’s

Simplified Buyer Financing
        For loans up to USD 100,000
        Up to 85% financing
        3 page loan agreement
        Costs – Interest plus USD 500 documentation fee
        3 years financial statements required – Turkish accounting standards

Buyer Financing
        Direct to buyer or with bank or third party guarantee (usually holding
         company)
        Typically up to USD 5-10 mln.
        IAS statements required by obligor
        Transactions possibly structured through Northstar Trade Finance
         Inc.– Asset security may be required



                                                                                  15
       Specific EDC Programs to Support SME’s
Pre-shipment Financing Guarantees
          Pre-shipment financing guarantee provides smaller exporters, with limited
           working capital, the ability to compete for foreign contracts
          Specific to an export contract
          Designed to help finance up front COSTS in relation to inventory financing
           (work in progress) when contract payments don’t match expenses
          Up to 75/25 risk sharing with Canadian financial institutions

          If you don’t get paid, you will still have to pay the money back to the bank

EDC Credits Insurance

        Insurance coverage against the risk of non-payment – both commercial and
         political risk
        Covers up to 90% of loss
        Benefits
            • Protection against a crippling loss
            • Working capital -- banks can lend against EDC-insured contracts
            • Competitiveness – meets your buyer’s credit needs
                                                                                          16
                    Tools for Buyers


   Buyers can learn about EDC directly by accessing our web-
    site for buyers at
           http://www.edc.ca/financing
   On-line application forms for buyers can be found through the
    above web-site or directly at:
           http://www.edc.ca/edcapp/ckb/buyerapp/buyer_app_e.asp


   Specific information on the EDC sector teams can be found at:
           http://www.edc.ca/prodserv/sectors/index_e.htm
   Detailed sector information has been developed for Plastics and
    Packaging sector (http://www.edc.ca/prodserv/ckb/pnp_e.htm)



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                Next Steps
   EDC trip to Turkey in November; participation in Canada
    Days in Izmir
   Munk Centre Conference on South Eastern Europe –
    February 2005
   Continued focus by EDC and It Can on Turkey and South
    Eastern Europe – recommendation from Dec 2003
    conference.




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                          EDC Contact
For more information on EDC and Turkey, please contact:

        Lorne Cutler
        Regional Manager
        South Eastern Europe and the Black Sea Region
        International Markets
        151 O’Connor Street
        Ottawa, Ontario,.
        Canada K1Z 6Y7
        Tel: 1-613-598-2745 Fax: 1-613-598-503
        Email: lcutler@edc.ca

        www.edc.ca




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