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Guaranteed Amount (What's the deal?)
EDC’s guarantee covers up to 75% of the aggregate of:
- The principal outstanding on the loan; and
- Accrued and unpaid interest for a period of up to 90 days commencing on the date such unpaid interest was due and terminating on the date of payment by EDC to the Bank (such period to be known as the overdue period).
Scotiabank’s Responsibilities (What do you have to do?)
The Bank will establish the loan with the Borrower (the Exporter) and will be responsible for funding, administration, and perfection of security. In the event of payment default under the loan, the Bank must make demand on the Borrower following the Borrower's payment default, in accordance with the Bank's practice. Upon failure of the Borrower to repay the loan or agree on an alternative course of action acceptable to the Bank, Scotiabank will have the right to call on EDC's guarantee, provided:
- The Borrower has been in payment default for at least 45 consecutive days; and
- That EDC receives the Scotiabank's request for payment within 60 days of issuance of the Banks demand letter to the Borrower. EDC will work with the Bank to protect their mutual interests.
Guarantee Call (How quickly does EDC pay the Bank?)
So long as the Bank has made demand on the Borrower in the event of payment default and subsequently requested payment from EDC in accordance with the time frames mentioned above, EDC will make payment within 30 days of receiving request for payment from the Bank. In the event that payment is made by EDC under the guarantee, EDC and the Bank will share proportionately in all rights and proceeds related to the security specific to the facility.
EDC Guarantee Fee (How much does EDC get paid?)
EDC’s guarantee fee will be equal to the aggregate of:
- A percentage (proportionate to the risk-share) of the Bank's interest spread on the loan over its cost of funds (with cost of funds calculated as the Bank's prime rate minus 0.50% per annum); and
- 50% of the Bank's set-up fees. Any other fees charged, such as standby fees, commitment fees or administration fees will be retained by the Bank.
Payment of the set up fee shall be made to EDC within five business days of receipt by the Bank from the Borrower. Payment of the interest spread is made at the time the Bank receives interest payments from the Borrower.
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