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Freight Forwarding: Delivering The WorldEDC – CIFFA Breakfast Seminars

2008

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Helping You Deliver the World

• Intro to EDC

• EDC solutions for your business

• Transportation Services solutions

• Contact Us

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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.

Corporate Information

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●Began operations in 1944

●EDC is a Crown corporation that reports to Parliament through the Minister of International Trade.

●EDC is 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.

Corporate Profile

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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 (14) : Brazil (2), China (2), Malaysia, Mexico (2), Poland, India

(2), Russia, United Arab Emirates, Singapore, Chile

Corporate Profile

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Our Mandate- Guides Us

At EDC our mandate is 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.

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CAD 10.2 billion in support to the Transportation Sector, and 727 customers in 2007

2007 Performance Highlights

Source Annual Report 2007

• Facilitated $77.7 billion in exports and international investments in more than 183 markets around the world, a 17.5% increase over 2006

• Served 6,963 customers (84% were small medium exporters)

• $9.6 billion was in Canadian direct investment abroad

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Economic Outlook

• Weak North American economy, with shipping volumes down and weak pricing

• Impact of High fuel costs

• 2006 pre-buy followed by swift downturn in trucking

• Environmental concerns at the forefront

• Uncertainty with regards to demand from China and India

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A unique environment implies unique challenges

•Fuel Efficiency is key to overcome the high prices of fuel?

•Greening investments (Smart Way program)

• Security Compliance initiatives

EDC can be part of the solution.

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How Can we Help?

•Protect you against losses when your buyers won’t or can’t pay

• Increase your access to working capital

•Access the cash needed to export •Grow your business and expand with

flexible financing solutions

•Provide financing for US border compliance (fast access to USA)

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Insurance

www.edc.ca/insurance

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What is Accounts Receivable Insurance? Accounts Receivable Insurance (ARI) covers exporters against non payment of their short term export receivables

through the issuance of credit 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

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• 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

Benefits of ARI

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Single Buyer Insurance

• Alternatively you can consider covering your sales to only one customer with our Single Buyer Insurance

• Cover an unlimited number of payments due by the same customer, up to $250,000, in a six-month period

• Policy insures up to 90% of your losses if you don’t get paid after your goods have been accepted by the buyer

• Targeted to the occasional exporter who have infrequent insurance needs (one or two exports a year)

• Simplified application process and policy to make it quick and simple to use

www.edc.ca/singlebuyer.

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Promptly determine your buyer’s credit profile with: 1) EDC Opinion Reports

● Obtain key credit and financial information on U.S. or foreign companies as well as an opinion as to whether the company is insurable

2) Dun & Bradstreet Information Reports● Fast and easy access to detailed credit

information reports on foreign companies.

EXPORT Check

Helps you decide how much (if any) credit you might want to extend to a potential U.S. or foreign customer.

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Export Financing

www.edc.ca/financing

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Financing Solutions for Exporters

●Export Guarantee Program

●Export Express Credit

●Security Compliance Loan

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• 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 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

Export Guarantee Program

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●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

Export Guarantee Program

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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.

Export Guarantee Program

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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.

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Security Compliance Loan

•Term loan up to $150,000

•Loan amount up to 85% of specific costs identified to become C-TPAT compliant

•Can cover up to $5,000 of the fees associated with the security gap analysis

•Repayable over a period of 3 years

•Unsecured

•Fast and simple loan approval process

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How it Works - Loan Application

EDC will use the following documentation to assess the loan application:

A completed Security Compliance Loan application form;

For CTPAT, a security gap analysis validated by an EDC approved independent trade consultant;

A completed Summary Sheet detailing the expenses required; and

The most recent audited or accountant prepared financial statements (three years).

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Contract Insurance & Bonding Services

●Bank Instruments guaranteeing contract performance Performance Security Guarantees (PSG)

Performance Security Insurance – wrongful call (PSI)

●Bank Instruments guaranteeing contract performance

●Foreign Exchange Facility Guarantee

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Foreign Exchange Facility Guarantee (FXG)

• The FXG is a guarantee to the financial Institution (FI), on a second demand basis, for 100% of the collateral provided to the FI with respect to the Exporter’s forward contracts facility, in the event that the Exporter does not close the forward contract on the “settlement date”. Forward contract tenors cannot exceed three years, with collateral limited to a maximum of 30% per forward contract depending of the exporters risk profile.

• EDC has full recourse to Exporter via an Indemnity Agreement.

• The FXG will free up working capital funds of the Exporter.

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EDC Case Study - Transport• CTPAT compliant due to US customer

requirements.

• $25-50 mln annual revenues, with over 50% from the automotive sector, break-even in 07

• Fleet of 50-75 trucks with larger owner operator fleet

• Operating line margined against receivables, fully utilized, and tighening covenants; fuel hedging, and foreign exchange facility

• “Greening” initiative (installing auxiliary power units, etc) in response to demand of US customers and a desire to be a “green” leader; can not borrow from the bank for these investments

Bottom Line: Well managed company recognizing the investment required to continue to evolve but without the access to capital required to do so; challenged by tightening working capital

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EDC Case Study - Transport• EDC Account Receivable Insurance

to increase receivables margining from 75 to 90%

• EDC FXG to free up operating line availability blocked off for Foreign Exchange Facility

• EDC guarantee to the bank to put in place a loan for “green” investments

Bottom Line: EDC helps free up working capital, creating a margin of comfort for the company, as well as support them in their investment plans

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Contact Us

Joanne Tognarelli Sector Advisor –

TransportationPhone: 613-597-8690Email: jtognarelli@edc.ca

Tammy Huston

Account Manager

Phone: (604) 638-6946

Email: thuston@edc.ca