Freight Forwarding: Delivering The WorldEDC CIFFA Breakfast Seminars2008

Helping You Deliver the World Intro to EDC EDC solutions for your business Transportation Services solutions Contact Us

Corporate Information Export Development Canada (EDC) is Canadas export credit agency, offering innovative financing, insurance and risk management solutions to help Canadian exporters and investors expand their international business.

Began operations in 1944EDC 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

Head Office:Ottawa Regional Offices (14):Vancouver, Calgary, Edmonton, Regina, Winnipeg, London, Toronto, Mississauga, Windsor, Montreal, Quebec City, Moncton, Halifax and St JohnsInternational Presence (14) : Brazil (2), China (2), Malaysia, Mexico (2), Poland, India (2), Russia, United Arab Emirates, Singapore, Chile

Corporate Profile

Our Mandate- Guides Us At EDC our mandate is to support and develop, directly or indirectly, Canadas export trade and Canadian capacity to engage in that trade, as well as to respond to international business opportunities.

Facilitated $77.7 billion in exports and international investments in more than 183 markets around the world, a 17.5% increase over 2006Served 6,963 customers (84% were small medium exporters)$9.6 billion was in Canadian direct investment abroad

CAD 10.2 billion in support to the Transportation Sector, and 727 customers in 20072007 Performance HighlightsSource Annual Report 2007

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

A unique environment implies unique challengesFuel 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.

How Can we Help?Protect you against losses when your buyers wont or cant payIncrease your access to working capitalAccess the cash needed to export Grow your business and expand with flexible financing solutionsProvide financing for US border compliance (fast access to USA)

Insurancewww.edc.ca/insurance

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 basisCovers up to 90% of losses when foreign buyers dont pay due to a number of commercial and political risks.Evergreen policies with annual reviewPay as you go

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 EDCs market/buyer intelligence

Single Buyer InsuranceAlternatively 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 dont 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.

Promptly determine your buyers credit profile with:

EDC Opinion ReportsObtain key credit and financial information on U.S. or foreign companies as well as an opinion as to whether the company is insurableDun & Bradstreet Information ReportsFast 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.

Export Financing

www.edc.ca/financing

www.edc.ca/financingFinancing Solutions for Exporters

Export Guarantee ProgramExport Express CreditSecurity Compliance Loan

A risk sharing guarantee designed to encourage Financial Institutions to advance loans to smaller exporters by providing additional security

Guarantee covers the Financial Institutions credit facility for :Up to 75% where EDCs exposure is between 500K and 10.0 millionUp 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 securityExport Guarantee Program

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 guaranteeExport Guarantee Program

Export Guarantee ProgramVariations 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; andForeign Direct Investment to support the acquisition of a foreign asset or company.

Export Express CreditAn 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.

Security Compliance Loan

Term loan up to $150,000Loan amount up to 85% of specific costs identified to become C-TPAT compliantCan cover up to $5,000 of the fees associated with the security gap analysisRepayable over a period of 3 yearsUnsecuredFast and simple loan approval process

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

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

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 Exporters 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.

EDC Case Study - TransportCTPAT compliant due to US customer requirements.$25-50 mln annual revenues, with over 50% from the automotive sector, break-even in 07Fleet of 50-75 trucks with larger owner operator fleetOperating line margined against receivables, fully utilized, and tighening covenants; fuel hedging, and foreign exchange facilityGreening 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 investmentsBottom 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

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

Contact UsJoanne Tognarelli Sector Advisor TransportationPhone: 613-597-8690Email: jtognarelli@edc.caTammy Huston Account ManagerPhone: (604) 638-6946 Email: thuston@edc.ca

Hi,Thanks for coming to our seminar on services offered by EDC and FAITC. EDC has not historically had a significant penetration into the services industry but we have evolved significantly over the years. We thought it was timely to introduce ourselves and how our support can tie into the services world, especially given the current challenging financing and insurance environment. My presentation will endeavour to give you an understanding of who we are, how we may be of help to your business, and touch on how it could apply to a company in your industry through presentation of a 2008 case study. EDC is Canadas export credit agency and were there to offer financing, insurance and risk management solutions for Canadian exporters or international investors. Many OECD countries have an equivalent organization, though EDC has evolved differently than most. ECAs were originally put in place to introduce accounts receivable insurance to the marketplace for international transactions. Over time, they incorporated financing for assets for which banks had no risk appetite such as aircraft. Within ECAs, EDC has evolved distinctly.

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EDC is a self-sustaining Corp, meaning that we do not receive taxpayer dollars, but operate like any private bank. We are not dependent on tax dollars to cover our costs. Other ECAs are not run on a self-sustaining basis. The U.S. Eximbank, for example, requires an appropriation from Congress to cover its operating/administrative expenses, and most of the European ECAs have lost billions of dollars over the years.

2EDC has both a national and international presence, with regional offices in most major Canadian commercial centers. Much of the underwriting is done at Head Office, but even there regional account managers act as the interface. EDCs mandate guides what we can support and its worth reading it and explaining it. A couple of examples:- Indirectly refer to support within supply chains of exporting industries. For the freight forwarding communities, an example of an export would be a PO signed by a non-canadian company. An example of indirect export would be the shipping of automotive parts across the border for a Canadian company. Since 86% of automotive is exported, all companies supporting that sector are deemed to also support exports. 2This is just to give an idea of size and scope of EDCs performance. Now to the meat of it. How can we help?

Companies choose to insure their receivables due to many different motivations:In order to meet a request from a client to offer extended payment terms. In order to increase the bank margining on foreign receivables. Typically, EDC insured receivables, are margined by banks at 90%. As such, it is a working capital tool as well. The other, obvious reason, is for risk mitigation, whether it is as a receivables management tool, or as a means of managing your risk when entering a new market. Finally, EDC does not charge clients for opinions on buyer insurability and can share some of our vast market intelligence with you.

Finally, we have a derivation specifically targetted to infrequent exporters, or to a company concerned only about a new client. The insurance is offered on one buyer, for a limit of up to $250k, and can be maintained for a 6 month period. The intent is that coverage can then be switched to a more permanent insurance if desired, or assumed directly on your books. Export check is another risk management tool that we offer, and is an online tool by which you can buy a credit opinion, for a very reasonable amount. Were going to touch on 3 export financing tools that may be of interest in different scenarios.

Our export guarantee program was put in place in order to help canadian companies access additional working capital from their banks by having EDC guarantee portions of the loan. The advantage to this structure is that we can leverage your banks existing relationship with you, and avoid the hassle of negotiating additional loan docs. We take a portion of their risk spread, leaving a sufficient part of the fees to cover their cost of funds, so there is no additional cost to you. We share pari passu with the bank on all terms, and security and we have prenegotiated loans with all the major banks, which simplifies the signing of the agreements. NOTE: These slides on Small Business Guarantee Program are to be used with generic audience and exporters ONLY. For presentations to banks, only use the PowerPoint slides, speaking notes and sales brochure for Working Capital Solutions for Banks found in LiveWire at:Livewire.edc.ca/Teams/National Sales/MLTFS Sales Tools/Working Capital Solutions for Banks/NOTE: These slides on Small Business Guarantee Program are to be used with generic audience and exporters ONLY. For presentations to banks, only use the PowerPoint slides, speaking notes and sales brochure for Working Capital Solutions for Banks found in LiveWire at:Livewire.edc.ca/Teams/National Sales/MLTFS Sales Tools/Working Capital Solutions for Banks/

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