21 October 2010
In early 2010, the company E. Aabo Andersen A/S in Svendborg, Denmark, won an order for the delivery of a paint system for a large Russian train-coach manufacturer – a crucial order that could prevent layoffs in the company.
As part of the agreement, the Danish company received prepayments for which it had to provide collateral. The prepayments constituted such a large part of the contract sum that the collateral would strain the company’s exposure with the bank quite significantly.
Consequently, E. Aabo Andersen’s bank did not wish to assume the risk associated with the Russian order on its own, but the bank was prepared to get involved if EKF would provide collateral for the prepayments through an export guarantee.
EKF guaranteed 80 per cent of the client’s prepayments, the bank accepted, and E. Aabo Andersen secured the Russian order.
Furthermore, EKF offered an export credit guarantee that insures against any unauthorised drawings by the client under the collateral, and a project delivery guarantee which insures the Danish company in the event of cancellation of the order or non-payment.The Russian order has saved a number of jobs at E. Aabo Andersen A/S. On top of that, thanks to the partnership with EKF, other potential clients in Russia and Belarus have become interested in the products of the Danish company.
“Negotiating a contract with Russian buyers is taxing and the contract terms we were initially offered were below the standards we would usually accept. However, with the assistance of EKF, among others, we negotiated a reasonable agreement that meets our usual terms with other clients,” says Ulla Gjerstrup, CFI, E. Aabo Andersen A/S.