EDC and Turkey: Focus on Small Business

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EDC and TurkeyFocus on Small Business
Canadian Turkish Business Council AGM 2004
October 2004
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EDC - Who We Are

• Established in 1944 as Canadas export credit
  agency, EDC provides trade finance and risk
  management services to Canadian exporters and
  investors in up to 200 markets.

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EDC Financial Highlights (C)
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EDC Business Volume (1996 to 2003
( billions)
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EDC Customer Base
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EDCs Sector Teams
International Markets Ottawa Intl
Representations Beijing, Warsaw, Mexico,
Monterrey, Sao Paolo, Rio de Janiero, (Kuala
Lumpur)
EDC Regional Offices - Vancouver -
Winnipeg - Calgary - Toronto - London -
Montreal - Quebec - Halifax - Moncton - St.
Johns - Edmonton - Ottawa
Small Export sales lt 1 million
Emerging Exporters Team
Centres of Expertise
Large Export sales gt 1 million
Centres of Expertise Project
Finance PRI CIB
Economics Equity
Adv. Tech., Machinery Equip.
Telecom
Automotive
Base Semi
Ground Transportation
Mining, Infrastructure Dev. Services
Consumer Goods
Aerospace
Agri-Food
SBFS
Financial Institutions
Forestry
Energy
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EDC Services

• 1) Financing
• EDC provides financing based on corporate risk,
  sovereign risk and project risk
• Pre-export financing for exporters
• Support for foreign investment based on corporate
  risk
• 2) Short Term Insurance
• EDC provides credits insurance to exporters to
  protect them against the risk that their buyers
  do not pay them for a variety of commercial or
  political reasons.
• 3) Political Risk Insurance
• EDC covers private sector investments and loans
• Coverage can be provided to equity investors
  and/or banks
• 4) Bonding Services
• EDC has variety of instruments to support bid
  bonds, performance bonds and warranty bonds
• 4)

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EDC and Turkey Business Volume (Cdn.
millions)
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Canadian Trade with Turkey
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Canadian Main Exports to Turkey

• Coal
• Iron ore
• Newsprint
• Wheat and other agricultural commodities
• Pulp
• Telecommunications equipment
• Aircraft helicopters
• Ground transportation systems

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EDC Financing in Turkey

• 1) Sovereign Lending
• EDC can consider sovereign lending. Due to IMF
  constraints, Turkish Treasury is very cautious in
  providing sovereign guarantees.
• Such guarantees critical for infrastructure
  projects.
• 2) Municipal Government Lending
• Can consider lending to municipal governments
  with credit ratings - currently only Istanbul is
  rated.
• Consideration will be very cautious as many
  cities have borrowed by relied on Turkish
  Treasury to make payments.
• EDC has agreement with SP to provide
  transaction-based credit ratings for unrated
  municipalities for transactions up to USD 5.0
  mln.

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EDC Financing in Turkey

• 3) Bank Lending
• EDC can work with several leading Turkish Bank
• Ak Bank Yapi Kredi
• Is Bank Garanti Bank
• Vakiflar Bank Oyak Bank
• Financbank Kocbank
• Disbank Turk Ekonomi Bankasi
• 4) Corporate Lending
• Companies can be considered subject to the
  following criteria
• Financial transparency - western accounting
  standards
• Strong financial position
• Possible credit rating
• Good credit record

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EDC Insurance in Turkey

• EDC can provide insurance coverage for
• 1) Acceptable Turkish banks (includes previous
  list of banks under Financing section) and other
  banks such as Anadolubank, Tekstilbank
• 2) Acceptable private buyers in cases where
  Information can be obtained from acceptable
  credit agencies

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EDC Support For Small Business in Turkey -
Highlights

• Financing
• Five financing deals since 2001 ranging from US
  106,000 to USD 3.0 mln.
• All loans directly with buyer. Two guaranteed by
  owner and one by bank
• Insurance
• In 2004 to date EDC has supported approximately
  47 exporters to Turkey.
• Approximately 41 were SMEs with average size
  deal of Cdn. 171,000.
• Total ST Insurance - 103.65 mln.
• DCIP - 89.1 mln. Coverage of L/Cs for
  Canadian banks
• Open Account 14.55 mln. Coverage for
  exporters

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Specific EDC Programs to Support SMEs

• Simplified Buyer Financing
• For loans up to USD 100,000
• Up to 85 financing
• 3 page loan agreement
• Costs Interest plus USD 500 documentation fee
• 3 years financial statements required Turkish
  accounting standards
• Buyer Financing
• Direct to buyer or with bank or third party
  guarantee (usually holding company)
• Typically up to USD 5-10 mln.
• IAS statements required by obligor
• Transactions possibly structured through
  Northstar Trade Finance Inc. Asset security may
  be required

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Specific EDC Programs to Support SMEs

• Pre-shipment Financing Guarantees
• Pre-shipment financing guarantee provides smaller
  exporters, with limited working capital, the
  ability to compete for foreign contracts
• Specific to an export contract
• Designed to help finance up front COSTS in
  relation to inventory financing (work in
  progress) when contract payments dont match
  expenses
• Up to 75/25 risk sharing with Canadian financial
  institutions
• If you dont get paid, you will still have to pay
  the money back to the bank
• EDC Credits Insurance
• Insurance coverage against the risk of
  non-payment both commercial and political risk
• Covers up to 90 of loss
• Benefits
• Protection against a crippling loss
• Working capital -- banks can lend against
  EDC-insured contracts

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Tools for Buyers

• Buyers can learn about EDC directly by accessing
  our web-site for buyers at
• http//www.edc.ca/financing
• On-line application forms for buyers can be found
  through the above web-site or directly at
• http//www.edc.ca/edcapp/ckb/buyerapp/buyer_app_
  e.asp
• Specific information on the EDC sector teams can
  be found at
• http//www.edc.ca/prodserv/sectors/index_e.htm
• Detailed sector information has been developed
  for Plastics and Packaging sector
  (http//www.edc.ca/prodserv/ckb/pnp_e.htm)

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Next Steps

• EDC trip to Turkey in November participation in
  Canada Days in Izmir
• Munk Centre Conference on South Eastern Europe
  February 2005
• Continued focus by EDC and It Can on Turkey and
  South Eastern Europe recommendation from Dec
  2003 conference.

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EDC Contact

• For more information on EDC and Turkey,
  please contact
• Lorne Cutler
• Regional Manager
• South Eastern Europe and the Black Sea Region
• International Markets
• 151 OConnor Street
• Ottawa, Ontario,.
• Canada K1Z 6Y7
• Tel [phone] Fax [phone]
• Email lcutler_at_edc.ca
• www.edc.ca