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Sub-supplier kk-group obtained vital liquidity for major order in China

An order for control systems for 200 wind turbines in China put kk-group’s liquidity under severe pressure. With the assistance of EKF, the Danish company obtained financing to process and deliver the order.
What
Control systems for 200 wind turbines in China
EKF's role
EKF provided a guarantee to kk-group’s bank covering 80 per cent of the bank’s credit to kk-group
EKF product
Working Capital Guarantee
When
2010
  • Quote

    Having EKF in our corner leverages our export potential – and makes the bank feel more at ease.

    Johnny Haahr, CFO, kk-group
    ​The Danish company kk-group manufactures control systems for wind turbines. In 2009 wind energy in China took a giant leap forward, and kk-group established a joint venture with a state-owned Chinese company.

    The following year, this translated into an order to one of China’s major wind turbine manufacturers, Haizhuang. The order was for 200 wind turbine control systems. However, the order presented kk-group with a problem.

    "It was an exceptionally large order and though we are a most creditworthy company, we simply needed liquidity to manufacture the order within a short period. As we were not ready to manufacture the order in China in collaboration with the Chinese partner, the long transport time to China would cause an additional delay before the order would be paid for," says Johnny Haahr, CFO, kk-group.
  • ​kk-group then contacted their bank, Danske Bank. But the bank did not want to assume the entire risk of lending the funds to kk-group until the company received payment from China.
     
    "Danske Bank could have offered kk-group the financing, but this would have impacted the company’s total exposure with the bank and could also have hampered the company’s other expansion activities," says Henrik Søndergaard Frederiksen, Head of Corporate and Business Banking, Danske Bank.
    ​This prompted Danske Bank to contact EKF whoassessed the risks associated with the transaction.

    "As a banker, I value EKF’s flexibility, which enables us to tailor financing to our customers’ needs and requirements. This is a great help to us and to the companies," says Henrik Søndergaard Frederiksen.
  • ​EKF offered to provide a guarantee for 80 per cent of Danske Bank’s credit to kk-group, while the remaining 20 per cent was at the bank’s risk.

    When we were able to borrow the funds at the bank with an EKF guarantee, we hastened to manufacture the control systems and ship them off to China. This was an attractive solution, because we did not have to overextend our credit line with the bank. Besides, the guarantee from EKF offered us a competitive edge because the customer did not have to pay in advance," says Johnny Haahr, CFO of kk-group.
    ​The guarantee period was four months during which kk-group manufactured and delivered the control systems and received payment from China.

    Both Danske Bank and the CFO of kk-group were satisfied with EKF’s assistance.

    "I met with highly sensible, business-minded advisors at EKF, who made a positive and dynamic impression. They gave us essential assistance in landing the order. Having EKF in our corner leverages our export potential – and makes the bank feel more at ease," says Johnny Haahr.
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