EFIC helped Viocorp international with an export working capital guarantee
When Sydney-based Viocorp International Pty Ltd (Viocorp), a provider of digital media products and services for the internet, won a sub-contract in Malaysia – its largest deal and first overseas project – it needed additional working capital to deliver on the agreement.
EFIC provided a five-month, A$1 million export working capital guarantee to Viocorp’s bank, ANZ, enabling the bank to lend the same amount to Viocorp to assist in financing the sub-contract works.
Viocorp had secured an A$5.4 million sub-contract with a global IT services company in Malaysia which was providing a customised internet broadcasting project to a client. Viocorp’s sub-contract was to provide works integral to the main contract, including implementing a digital publishing platform and an integrated advertising solution, redesigning five client portals and implementing TV on demand so that end users can buy and watch content through any internet-connected device.
Most of the sub-contract works were to be completed within the first eight months and required product development and substantial cash investment by Viocorp. However, under the sub-contract, Viocorp received periodic payments from its customer. The mismatch between when Viocorp incurred costs and received payment under the sub-contract meant that the company faced a working capital shortage and needed additional funding to perform the sub-contract.
ANZ was willing to provide a loan for working capital to the company with EFIC’s support. EFIC’s export working capital guarantee gave the bank a guarantee for repayment of that loan.
“Without EFIC’s support to help us access additional working capital, it would have been extremely difficult for Viocorp to undertake this contract and continue expanding our business overseas,” said Viocorp’s Executive Chairman Ron McCulloch.
An export working capital guarantee is a guarantee from EFIC to an exporter’s bank. It guarantees repayment of certain amounts that the bank lends to the exporter to assist in financing one or more export contracts.
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