edc presentation

8/11/2019 EDC Presentation

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Taking on the World

Helping You Succeed in InternationalBusiness

Albert van Eeden

Regional Vice-President Ontario,

Commercial Markets & Small Business

September 17, 2009


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EDC Mandate

Export Development Canada (EDC) is Canada's export credit agency,offering financing, insurance and risk management solutions to help

Canadian exporters and investors expand their international business.

Every year, EDC's knowledge and partnerships are used by more than8,300 Canadian companies and their global customers in up to 200 marketsworldwide. Approximately 80 per cent of EDC's customers are small and

medium-sized businesses.

EDC is a Crown corporation wholly owned by the Government of Canada. The corporation is financially self-sustaining and operates oncommercial principles.

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Authorized Share Capital increased from $1.5bn to $3bn

Contingent Liability Limit Increased from $30bn to $45bn

Canada account limit increased from $13bn to $20bn

Domestic powers

Became law when Parliament passed Budget 2009 on March 12.

Authority to provide financing and insurance services for the Canadian

domestic market for a period of two years.

Government established the Business Credit Availability Program (BCAP)

to guide collaboration between EDC, BDC and the private sector financial

institutions.

EDCs Expanded Financial Flexibility


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Export Development CanadaInsurance Solutions for Canadian Companies

Accounts Receivable Insurance covers your receivables up to 90 per cent of losses resulting from

commercial or political risks.

Single Buyer Insurance covers multiple sales to one customer for six months on contracts worth

up to USD$250,000.

EXPORTProtect covers single export transactions for 90 days worth up to USD$250,000.

Contract Frustration Insurance covers up to 90 per cent of your losses for one export contract.

Political Risk Insurance protects your overseas assets and investments against Transfer &

Conversion, Political Violence, Expropriation, Arbitration Award Default, Non-honouring of a

Sovereign Payment Obligation.

EDC Products and Services

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http://www.edc.ca/english/insurance_accounts_receivable.htmhttp://www.edc.ca/english/insurance_single_buyer.htmhttp://www.edc.ca/edcsecure/exportprotect/epquote.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportprotect/epquote.asp?frompage=&sLang=ehttp://www.edc.ca/english/insurance_contract_frustration.htmhttp://www.edc.ca/english/insurance_political_risk.htmhttp://www.edc.ca/english/insurance_political_risk.htmhttp://www.edc.ca/english/insurance_contract_frustration.htmhttp://www.edc.ca/edcsecure/exportprotect/epquote.asp?frompage=&sLang=ehttp://www.edc.ca/english/insurance_single_buyer.htmhttp://www.edc.ca/english/insurance_accounts_receivable.htm


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Example 1 : Accounts Receivable Insurance

CanadianCompany

Foreign

Buyer (s)

$

Insurancepolicy

Canadian bank

Credit facility

Assignment of EDC policy

Payment (inevent of a claim)

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Export Development CanadaBonding Solutions for Canadian Companies

Performance Security Guarantee fully protects your bank in the event of a call on a contractual

guarantee they issued on your behalf.

Performance Security Insurance covers up to 95 per cent of your losses if your customer demands

payment of a bond issued by your bank without valid reason.

Surety Bond Insurance fully protects your surety company in the event of a call on a contractual

guarantee they issued on your behalf.

A Financial Security Guarantee gives your financial institution a guarantee in lieu of collateral so

that you can obtain a letter of guarantee for your suppliers including regulatory bodies, utilities,

etc.


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http://www.edc.ca/english/bonding_performance_security.htmhttp://www.edc.ca/english/insurance_performance_security.htmhttp://www.edc.ca/english/bonding_surety_bond.htmhttp://www.edc.ca/english/bonding_financial_security.htmhttp://www.edc.ca/english/bonding_financial_security.htmhttp://www.edc.ca/english/bonding_surety_bond.htmhttp://www.edc.ca/english/insurance_performance_security.htmhttp://www.edc.ca/english/bonding_performance_security.htm


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Example 2 : Performance Security Guarantee

Canadian Bank

CanadianCompany

Buyer

$

Performance Bond

PerformanceSecurity

Guarantee(100%)

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Export Development CanadaFinancing Solutions for Canadian Companies

EXPORT Express Credit is tailored to the needs of small business and provides unsecured loans

of up to $50,000 to help you grow your export business.

Export Guarantee Program gives your financial institution a guarantee to enable you to obtain a

loan to finance your export-related activities or foreign investments.

A Foreign Exchange Facility Guarantee gives your financial institution a guarantee in lieu of

collateral so you can buy a foreign exchange contract to protect against currency fluctuations.

A Financial Security Guarantee gives your financial institution a guarantee in lieu of collateral so

that you can secure an operating line of credit with a foreign bank for your offshore activities.

Loans to Canadian companies and/or their foreign affiliates for working capital or to support

Canadian investments abroad


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http://www.edc.ca/english/financing_export_express_credit.htmhttp://www.edc.ca/english/financing_export_express_credit.htmhttp://www.edc.ca/english/financing_export_guarantee.htmhttp://www.edc.ca/english/bonding_foreign_exchange.htmhttp://www.edc.ca/english/bonding_financial_security.htmhttp://www.edc.ca/english/bonding_financial_security.htmhttp://www.edc.ca/english/bonding_financial_security.htmhttp://www.edc.ca/english/bonding_financial_security.htmhttp://www.edc.ca/english/bonding_foreign_exchange.htmhttp://www.edc.ca/english/financing_export_guarantee.htmhttp://www.edc.ca/english/financing_export_express_credit.htm


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Example 3: Export Guarantee Program

Canadian bankExportGuaranteeProgram(50% to 90%)

Credit facility CanadianCompany

Buyer

$

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Example 4: Export Guarantee Program (Foreign investment)

Canadian bankExportGuaranteeProgram(up to 100%)

Acquisition Financing CanadianCompany

Foreignsubsidiary

Acquisition

Local Financing

Foreign bank

Guarantee

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Export Development CanadaFinancing Solutions for Foreign Companies

Loans offer flexible financing options for foreign buyers of Canadian goods and/or services.

Guarantees can be provided when another financial institution is prepared to participate in the

financing of an export sale. We can work with them on a risk-sharing basis.

Lines of Credit can be established for foreign companies intending to buy repeatedly from

Canadian companies. We also have lines of credit established with various foreign financial

institutions worldwide that can on-lend money to buyers of Canadian goods and/or services.

These lines of credit are particularly suitable for smaller transactions.


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http://www.edc.ca/english/financing_foreign_loans.htmhttp://www.edc.ca/english/financing_foreign_guarantees.htmhttp://www.edc.ca/english/financing_foreign_lines_of_credit.htmhttp://www.edc.ca/english/financing_foreign_lines_of_credit.htmhttp://www.edc.ca/english/financing_foreign_guarantees.htmhttp://www.edc.ca/english/financing_foreign_loans.htm


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Export Development CanadaOther Resources - available through WWW.EDC.CA EXPORT Check, you can quickly and easily obtain valuable financial and credit information on your U.S. and

foreign customer using our online database covering millions of companies.

Foreign Countries Information

Global Export Forecast, identifies the major forces acting on the world economy and their implications forCanadian exporters. It describes which foreign markets will offer the best opportunities for Canadian exporters for

the coming year, and analyzes the sales outlook by sector. It also discusses the major risks faced by exporters.

Weekly Commentary, each Wednesday, a concise analysis of global issues for Canadian Exporters

Trade Confidence Index

Industry Sector and Commodities Information

Publications & Subscriptions, range of complimentary subscriptions to weekly, monthly and quarterly publications-articles, electronic newsletters and magazines-to keep you current on developments relevant to your industry and

business. More Tools , range of online tools designed to assist Canadian companies whether they are just beginning to

export or are experienced exporters.

If you're just beginning to research exporting:

take a trade-related elearning course;

assess your export-readiness;

discover sources of financing support; or sign up to receive our quarterly ExportWise magazine.

As an experienced exporter, you may want to:

identify the EDC product or service best suited to your needs;

calculate currency conversions on your U.S. or foreign sales; or


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http://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/english/tools_learn.htmhttp://www.edc.ca/edcsecure/exportable/intro.asp?lang=ehttp://www.edc.ca/english/tools_12185.htmhttp://www.edc.ca/english/publications_export_wise.htmhttp://www.edc.ca/edcsecure/onlineadvisor/olaHome.asp?slang=ehttp://www.bankofcanada.ca/en/rates/exchange.htmlhttp://www.bankofcanada.ca/en/rates/exchange.htmlhttp://www.edc.ca/edcsecure/onlineadvisor/olaHome.asp?slang=ehttp://www.edc.ca/english/publications_export_wise.htmhttp://www.edc.ca/english/tools_12185.htmhttp://www.edc.ca/edcsecure/exportable/intro.asp?lang=ehttp://www.edc.ca/english/tools_learn.htmhttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=ehttp://www.edc.ca/edcsecure/exportcheck/ecbridge.asp?frompage=&sLang=e


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Case study

ABC Inc. - Manufactures electronic equipment;

Annual Revenue $8.0M;

Bank Line of Credit $2.0M;

New $2.0M contract signed with a buyer in Mexico.

Payment terms:

15% at contract signing; in exchange, an advance payment bond is required;

70% payable net 60 days from receipt of merchandise;

15% payable at commissioning; in exchange, a performance bond is required for a period of 24

months for the Mexican buyer.

Canadian subcontractor will provide the electrical components. Payment terms: Net 60 days.

Chinese supplier will provide the raw material, a 15% deposit, balance settled by irrevocable letter of

credit.

Negative cash flow of $1.0M for nine-month production period.

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Case Study - ABC Inc.

Time

DeliverySign Contract

9 months

Canadian or

foreign

suppliers and

subcontractors

Cash flow

Financing

of work in progress

Risk of

non-

payment

(15 %)

Risk of

non-

payment

(70%)

Currency

conversion

risks

Performance

bond

Buyer

financing

Advance

Payment Bond

Production

Commissioning

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Case Study - ABC Inc

Challenges for the exporter:

Securing more flexible and advantageous payment terms;

Trying to minimize cash outflow at start of production.

Bonds or guarantees are typically carved out of the existing bank working capital facilities

EDC support:

EDC could guarantee up to 50% of yearly purchases from Canadian or foreign suppliers

EDC could cover up to 100% of the advance payment bond required by the supplier

Canadian or

foreign

suppliers and

subcontractors

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Currency

conversion

risks


Protecting the profit margin;

Typically has to provide tangible security in support of bank FX facility

EDC support: EDC could cover 100% of the bank FX facility for a period of 12 months

Guarantee renewable annually

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Financing

of work in progress

Challenges for the exporter: Access to working capital financing for work in progress;

EDC support:

EDC could guarantee the banks loan or line of credit, or possibly lend directly to ABC

Up to 90% guarantee for loans under $500K and up to 75% guarantee for loans over $500K;

Other possible scenarios for EDC loan guarantee

Term financing for the acquisition of equipment needed to complete the productio

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Buyer

financing


Offering a financing proposal to a foreign buyer in addition to a product.

EDC support:

Financing for up to 85% of contract value, including up to 30% of local costs;

Average maximum period of term loan: 5 years; Registration of securities and foreign securities, if necessary.

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Risk of

non-payment by

the foreign buyer

Challenges for the exporter: Protection against cancellation of the contract during production;

Ensuring buyer payment for the order after delivery.

EDC support:

EDC could insure 90% of the costs incurred before shipping;

EDC could insure 90% of the accounts receivable after delivery;

The bank can be designated as beneficiary;

Possibility of coverage for one market and one buyer or several markets including Canada andseveral buyers;

Different types of insurance coverage: shipping, contracts and services.

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Performancebond


Issuing a bond for the duration of the contract without tying up their line of credit

Protection against a wrongful call or a rightful call beyond their control.

EDC support:

Issuance of an EDC guarantee for 100% to support the letter of guarantee provided by the bank.

Insurance of 95% coverage for the exporter against a wrongful call by their buyer.

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Thank You!


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Thank You!

Contact us:

Call 1-866-283-2957, weekdaysbetween 8 a.m. and 6 p.m. EST

Visit our website at www.edc.ca

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