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Large Russian order for Funen company

Assisted by EKF, E. Aabo Andersen in Svendborg, Funen landed a vital order from a Russian customer while at the same time tapping into a promising market.
E. Aabo Andersen delivers finishing plant for large Russian manufacturer of train carriages
How much
approx. DKK 12 million
EKF's role
Guarantee for advance payments and risk coverage for default by Russian customer
EKF product
Working Capital Guarantee; Bond Guarantee
  • Quote

    Without EKF we would never have got anywhere near the order. Besides, our arrangement with EKF means that we avoid stretching our guarantee limit with our bank.

    Claus Aabo Andersen, Managing Director, E. Aabo Andersen A/S

    ​In early 2010, the firm of E. Aabo Andersen in Svendborg took an order to supply a finishing plant to a large Russian train carriage manufacturer. As part of the contract, the Danish company received advance payments for which it was required to provide security.

    If a small-scale Danish business takes on a large order, it may have difficulty furnishing the required security through its usual bank. And as the advance payments in this case amounted to a large percentage of the total contract value, providing the security would severely strain the company's commitment to its bank.

    Getting the order through was imperative for E. Aabo Andersen, as it would prevent redundancies.

  • ​​E. Aabo Andersen's Danish bank sought a solution with EKF, as the bank did not wish to assume sole liability for the Russian order.

    The bank was willing to make a commitment if EKF would provide security for the advance payments in the form of a Working Capital Guarantee.
    ​"Contract negotiations with Russian buyers are demanding, and in the first round we were facing poorer contract terms to what we would normally agree to.

    But thanks to factors such as EKF's assistance we succeeded in negotiating a fair contract to match the terms we have with other customers", says finance director Ulla Gjerstrup, E. Aabo Andersen.
  • ​E. Aabo Andersen landed the Russian order with a working capital guarantee from EKF. This guarantee provides security for 80 per cent of the customer's advance payments.
    In addition, EKF offered a bond guarantee as protection against any unwarranted deductions by the customer on the security for the advance payments, and a  project delivery guarantee to protect the Danish firm against e.g. cancellation of the order or default on payment.
    "Our arrangement with EKF has been a great boon. The EKF staff are highly competent, fast off the mark and were solicitous in assisting us in the negotiations with the Russian customer," says Claus Aabo Andersen, managing director at E. Aabo Andersen.
    The Russian order has saved a number of jobs at E. Aabo Andersen. Besides which, our association with EKF has made other prospective customers in Russia and Belarus interested in the Danish company's products.​
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