The Alta Group – Latin America Conference

NEW EXPORT CREDITINSURANCE PROGRAMS

---------FOR VENDORS AND CAPTIVE LENDERS

PRESENTEDNOVEMBER 2008

BY GARY MENDELLMERIDIAN FINANCE GROUP

Meridian Finance Group provides credit, insurance, and financial services that help vendors grow their export sales.

In addition to cross-border equipment financing, we offer sales and risk management tools like export credit insurance.

Now we have export credit insurance programs that vendors and captive lenders can use to finance their own international deals . . .

. . . with confidence they’re going to get paid.

Introduction

Equipment buyers in emerging markets throughout Latin America, even well-established creditworthy companies, face limited access to capital, currency exchange controls, and high interest rates.

Cash in advance and letters of credit are no longer competitive terms in these countries, engendering opportunities for vendors and captive lenders who can provide cross-border equipment financing.

The key to doing these deals is knowing howto mitigate international non-payment risks withexport credit insurance.

Export Market Demand

Customer bankruptcy, receivership, or insolvency

Protracted slow payment for any number of reasons

Cash flow problems or balance sheet issues

General economic conditions

Currency fluctuations

Foreign exchange/transfer controls

Expropriation and other political risks

War, strikes, embargoes, trade sanctions

Changes in governments, policies, regulations

Export Credit Risks

Export credit insurance protects foreign receivables against virtually all non-payment risks, including bankruptcy, protracted default, war, asset expropriation, etc.

Most policies cover 90% of the financed amount plus interest.

Export credit insurance policies are underwritten by insurance companies highly rated by Moody’s, Standard & Poor’s, Fitch Ratings, and/or A.M. Best.

All kinds of equipment can be financed, in mostcases without regard to their country of origin.

The premiums may be passed to borrowers up-front or included in the financing and amortized.

Export Credit Insurance

Meridian pioneered the use of export credit insurance for middle-market cross-border financing transactions.

Now we can offer this kind of coverage to other lenders.

In order to be insured comprehensively against virtually all non-payment risks, deals need to be structured as true sales or finance leases and documented with promissory notes and/or other “come-hell-or-high-water” payment agreements.

Coverages available for operating leases orrental agreements insure only a relatively shortrolling window of monthly payments plusnon-repatriation/deprivation of collateral risks.

Programmatic Policy Structures

Large-Ticket Stand-Alone Deals Individual Deal Size ≥ $5,000,000 Borrower Size ≥ publicly-traded with local-currency

debt rating, well-established, no derogatory information Annual Deal Volume: No minimum Payment Terms: Up to 5 years

Upper-Middle-Market Transaction Portfolios Individual Deal Size ≥ $1,000,000 Borrower Size ≥ $25,000,000 in sales with

GAAP audited statements, well-established, no derogatory info, personal guarantees of principals

Annual Deal Volume ≥ $10,000,000 Payment Terms: Up to 3 years

Four Program Options (1 & 2)

Lower-Middle-Market Transaction Portfolios Individual Deal Size ≥ $100,000 Borrower Size ≥ $5,000,000 in sales with audited statements,

well-established, no derogatory info, personal guarantees Annual Deal Volume ≥ $3,000,000 Payment Terms: Up to 2 years

Smaller-Ticket Deals Individual Deal Size: No minimum Borrower Size: Well-established with at least

locally-audited financials, no derogatory info Equipment Origin: Made in USA Annual Deal Volume: No minimum Payment Terms: Up to 1 year

Four Program Options (3 & 4)

A vendors’ or captive lender’s insured foreign receivables can be carried on their own books or financed by assigning policy proceeds to a bank or another lender.

A third-party lender named as a policy’s loss-payee will typically fund 100% of the debt obligation with recourse on the (10%) uninsured portion or they’ll disburse only the insured (90%) portion of the transaction.

Alternatively, a third-party lender can simplymake the loan to the foreign buyer itself andpay fee income to the vendor or captive lender.But the presumption of this presentation is thatyou want to do such deals on your own paper.

Financing Insured Receivables

Export credit insurance can be used to cover financing of individual pieces of equipment, fleets, turn-key installations, software packages, engineering services, franchises, infra-structure projects, and other kinds of contracts.

Vendors can also use export credit insurance to cover sales of spare parts, raw materials, durable goods, consumables, commodities, services, etc., on shorter open-account credit terms, typically from 30 to 180 days.

A vendor’s insured foreign receivables can becarried on the vendor’s own books or financedby assigning policy proceeds to a bank/lender.

Covering Non-Equipment Sales

TRADE FINANCE Cross-Border Equipment Financing Revolving Buyer Credit Facilities Note Purchase Agreements Custom Financing Structures

INSURANCE Export Credit Insurance Political Risk Coverages Global Receivables Insurance Policies for Financial Institutions

Meridian Finance Group

Meridian Finance Group

1247 7th Street, Suite 200Santa Monica, CA 90401

Tel: 310 260 2130Fax: 310 260 2140

gmendell@meridianfinance.comcpena@meridianfinance.comwww.meridianfinance.com

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