(OTTAWA) – October 22, 2014
Sid Puddicombe and Associates (SPA), a small family-owned business that specializes in golf course construction, is in the process of completing a championship golf course in Auckland, New Zealand.
The important contract with the New Zealand buyer required a performance bond, a form of protection for the foreign buyer in case the project is not completed according to plan.
“I never knew this type of facility existed and it was a great fit for our company. It allowed us to compete with the biggest of players, anywhere in the world,” said Grant Puddicombe, Managing Director, Puddicombe Golf.
“Our company had a unique opportunity on a significant overseas development,” explained Mr. Puddicombe. “However, when we were faced with posting a bond in excess of 1 million dollars, we needed to balance our overseas cash flow. The facility that EDC put in place allowed us to both manage our cash flow and provide the developer with the assurance that we were backed. This kind of bond made our customers, and our bank, very comfortable with our project.”
EDC is Canada’s leading provider of financing, insurance and bonding products for small Canadian companies that have contracts or business outside of Canada.
“This type of bond is not uncommon, and when the banks of bigger foreign buyers see a small family business taking on a multi-million dollar project, regardless of their excellent track record, they will want to protect the total investment,” said Françoise Faverjon-Fortin, Vice-President of Contract Insurance, Bonding and Political Risk Insurance, EDC.
“EDC’s bonding products help small companies like SPA manage the costs of bidding and winning contracts,” Faverjon-Fortin added. “Without these bonds, small companies could have no other choice but to use their cash reserves in the amount of the bond request, which can be a tremendous burden on the company.”
EDC worked with SPA’s Canadian banker, ATB Financial, to provide a CAD 1.2 M performance bond for the project.
“We hear a lot about the importance of helping small businesses diversifying their buyers across several markets to avoid having all of their eggs in one basket, which hurt a lot of Canadian companies when the Canadian and U.S. economies were in a protracted recession,” Faverjon-Fortin explained.
EDC’s bonding products help take a lot of the risk for the foreign buyer off the table, and makes it easier for small companies to win new customers anywhere in the world. If this sounds like something your company needs, give us a call, we can help.
Canadian companies with similar needs can call 1-888-434-8508 or visit EDC Bonding Products.
EDC is Canada’s export credit agency, providing financing and insurance solutions locally and around the world to help Canadian companies of any size respond to international business opportunities. As a profitable Crown corporation that operates on commercial principles, EDC works together with private- and public- sector financial institutions to create greater capacity for Canadian companies to engage in trade and investment.
For more information about how EDC can help your company, visit www.edc.ca.
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Phil Taylor
Export Development Canada
(613) 598-2904
ptaylor@edc.ca
