EDC Corporate Presentation to Maritime Lumber Bureau June 5, 2008 1
Agenda Corporate Overview Overview of EDC s Products Insurance Financing Solutions For Exporters For Foreign Buyers Contract Insurance Bonding 2
Corporate Overview 3
Corporate Mandate At EDC our mandate to support and develop, directly or indirectly, Canada s export trade and Canadian capacity to engage in that trade, as well as to respond to international business opportunities guides everything we do. 4
Corporate Information Export Development Canada (EDC) is Canada s export credit agency, offering innovative financing, insurance and risk management solutions to help Canadian exporters and investors expand their international business. 5
Corporate Profile Began operations in 1944 EDC is a Crown corporation that reports to Parliament through the Minister of International Trade. EDC is a wholly owned by the Government of Canada. The corporation is financially self-sustaining and operates on commercial principles. EDC conducts its activities in a socially responsible manner and carefully balances the need to operate in a sound financial manner with its public policy value. 6
Corporate Profile (cont d) Head Office: Ottawa Regional Offices (14): Vancouver, Calgary, Edmonton, Regina, Winnipeg, London, Toronto, Mississauga, Windsor, Montreal, Quebec City, Moncton, Halifax and St John s International Presence (13) : Brazil (2), China (2), Malaysia, Mexico (2), Poland, India (2), Russia, United Arab Emirates, Santiago Chile office opening in May 2008 7
2007 Performance Highlights Facilitated $77.7 billion in exports and international investments in more than 183 markets around the world 20.8 billion of EDC s business was in emerging markets Served 6,963 customers (84% were small medium exporters) $9.6 billion was in Canadian direct investment abroad The business EDC facilitated helped generate $55.6 billion to Canada s GDP, about 4.5% of GDP, and supported 624,000 jobs Customer Satisfaction Index of 85.6 was achieved in 2007. 8 Source Annual Report 2007
Overview of EDC Products 9
EDC can help you to Protect against losses when your foreign buyer can t or won t pay Enter new markets and expand existing ones Offer your customers more flexible payment terms Increase your access to working capital Ensure your export success with EDC s Account Receivable Insurance (ARI) www.edc.ca/insurance 10
EDC can help you to Break into new markets around the world Offer your international buyers flexible financing and payment options Provide the capital a foreign buyer may need to buy from Canadian Exporters like you with EDC s Financing www.edc.ca/financing 11
EDC can help you to Grow your business by providing flexible financing solutions Cover all costs associated with a specific export contract Access the cash needed to export Get a flexible financing solution with EDC s Export Express Credit www.edc.ca/financing 12
EDC can help you to Access the working capital you require Meet up-front costs of an export contract Increase sales in international markets Get the capital you need from your bank with EDC s Export Guarantee Program www.edc.ca/financing 13
EDC can help you to Get bonds issued without tying up your cash Protect yourself from having a foreign buyer call your bond when you ve done nothing wrong Meet the bonding needs of your export contract with EDC s Bonding Services www.edc.ca/bonding 14
EDC can help you to Protect yourself for up to 90% for various forms of investments (equity, assets, equipments ) Attract additional project capital Protect your investments abroad with EDC s Political Risk Insurance (PRI) www.edc.ca/pri 15
Insurance www.edc.ca/insurance 16
What is Accounts Receivable Insurance? Accounts Receivable Insurance (ARI) covers exporters against non payment of their short term export receivables through the issuance of credits insurance Policies. Covers credit sales on a global comprehensive or selective portfolio basis Covers up to 90% of losses when foreign buyers don t pay due to a number of commercial and political risks. Evergreen policies with annual review Pay as you go 17
Benefits of ARI Allows exporters to offer more flexible payment terms with EDC- backed credit decisions Helps increase access to working capital (e.g. by using ARI as collateral against operating lines) Helps improve cash flow (e.g. by freeing up capital normally provisioned for losses) Helps exporters to break into new markets around the world Provides on-going access to EDC s market/buyer intelligence 18
Export Financing www.edc.ca/financing 19
Financing Solutions for Exporters Export Guarantee Program Export Express Credit www.edc.ca/financing 20
Export Guarantee Program A risk sharing guarantee designed to encourage Financial Institutions to advance loans to smaller exporters by providing additional security Guarantee covers the Financial Institution s credit facility for : Up to 90% for guarantees 500k Up to 75% where EDC s exposure is between 500K and 10.0 million Up to 100% for guarantees in support of qualifying foreign investment-related credit facilities of Canadian companies. Existing operating lines of credit are not affected. Financial Institution is responsible for funding and perfecting security 21
Export Guarantee Program 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 loans can be up to 100% of the contract costs. The term of the loan is linked to the payment terms identified in the commercial contract. Variations of support: Contract Specific One-off or Bulge facility to specifically support an export contract. Revolving Facility specifically support a series of purchase orders or contracts knowing each deal is covered under the guarantee 22
Export Guarantee Program Variations of support: Operating Facility A general corporate purpose facility to be administered by the provider in support of day to day operational activities. Term Loan Facility Infrastructure investment in Canada relating to specific existing export contracts; Infrastructure investment in Canada relating to general corporate purpose financing; and Foreign Direct Investment to support the acquisition of a foreign asset or company. Margining of Foreign Accounts Receivables Loan proceeds are to support working capital needs 23
Export Express Credit An unsecured export loan program designed for Canadian exporting companies with annual sales of less then $5 million. Provides loans up to $50,000 with flexible repayment terms of up to two years. Cover specific contract costs all costs associated with a specific export contract. Fund a marketing program this includes trade shows, brochures, display units, market research, etc. Purchase equipment the equipment must be specific to the manufacturer of the specific product being exported. 24
Contract Insurance & Bonding (CIB) www.edc.ca/insurance www.edc.ca/bonding 25
Financial Security Guarantee (FSG) The FSG provides the bank with a second demand guarantee to secure exporters obligations in respect of suppliers and offshore working capital facilities. The FSG frees up working capital to the exporter. Specifically, the FSG is: a 100% irrevocable and unconditional guarantee to the bank; an indemnity-based instrument; payable only after the FI has made a simple demand (i.e. no need to take legal action, enforce security rights, etc ) on the exporter and the latter has not paid within 10 business days; EDC support would match that of the underlying guarantee, which in most cases would be for roughly a one year period, with each subsequent period leading to a review of our support; restricted to offshore working capital facilities that are in place for operating purposes only and not exceeding USD 5 million, there is no limit for supplier support; and in the case of a supply contract, normally in support of an amount not exceeding 50% of the contract and/or three months supply 26
Questions? 27