Abstract
Melville Corporate Finance, Inc. (Melville) is approached by a Canadian bottling equipment manufacturer to provide $3.4 million of capital investment foreign buyer financing to their customer, a rapidly expanding Chinese bottling company. The Chinese company needs to purchase the equipment and increase its production capacity to secure long-term, multi-million dollar contracts with Pepsi and Coca-Cola in Thailand. With very short deadlines, Melville's CEO works with Export Development Canada (EDC) to assess the risks involved in offering full financing and insurance for the Chinese bottler, and must keep in mind that the Canadian manufacturer will lose the sale if the financing does not get approved. The deal presents several challenges to Melville; an unknown foreign buyer with no proven credit history, language and communication barriers, geographic distance, incongruent accounting standards, etc. As the risk variables emerge, both Melville and EDC must decide if the stakes are too high to support the transaction.
Highlights
12 September 2008, 3:58 pm, Melville Corporate Finance, Inc., Vancouver OfficeJust 72 hours after returning from a week’s holiday, Chris Haselbach was about to join a 4:00 pm progress briefing on the new financing deal in China
Melville had plenty of ongoing projects in Latin America and there were numerous financing arrangements to be explored. There were even those at Export Development Canada (EDC) that thought prospecting in Latin America was easier
Neither Chris nor the EDC Account Manager wanted to be swayed by Bottle King Zhongshan (BK) choosing not to go with Kohen Manufacturing (KM) if this deal could not be resolved in time
Summary
Just 72 hours after returning from a week’s holiday, Chris Haselbach was about to join a 4:00 pm progress briefing on the new financing deal in China. Chris was CEO and founder of Melville Corporate Finance, Inc. Chris wondered if it was reasonable to expect the deal to materialize. He knew that he could not pursue this further without a full agreement from Export Development Canada (EDC). The EDC Account Manager had been great in the past and EDC’s knowledge and expertise complemented that of Melville’s team. Together they were good at rapidly and properly evaluating risks.
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