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International Seafood CorporationCagayan De Oro Rubber Export, Inc.Low Interest Rate International Trading C
orporationAsian Rare Metal Corporation
Case Study:
International Seafood Corporation (ISC)
Question 1 Risk Areas / Factors
Credit Risk – inability of ISC to repay the Bank for the funds borrowed
FX Risk – sudden changes in exchange rate of supplier’s currency
Production Risk – inability of suppliers to provide goods to ISC
Transportation Risk – possible loss / delay of cargo while in transit
Political Risk – risk of unfavorable foreign government action
International Seafood Corporation (ISC)
Question 2Questions to ask Ms. Cabral
Schedule and volume of remittances to supplier
List of suppliers, location, product supplied, and currency for payment
Who is the surety for the BDO loan of P5M?
ITR and FS for the past 3 years
International Seafood Corporation (ISC)
Question 3Loan Package
Omnibus Line ------------------- P 7.0M Available as:
Loan Line – For additional capital requirementsImport L/C – For importation purposes
Rate: Prevailing Regular Rate + 1% p.a.
Security: Surety Agreement Renewable Annually
Cagayan De Oro Rubber Export, Inc.
Question 1Will you recommend the loan?NO, because..○CAPACITY of the BORROWER to pay is QUESTIONABLE since no business has been established yet
○Owner has NO EXPERIENCE in the rubber industry
○The project analysis is NOT ASSURANCE of success.
Cagayan De Oro Rubber Export, Inc.
Question 2Risk Areas / Factors○Credit Risk – inability of CDO Rubber to
repay the Bank for the funds borrowed○Liquidity Risk – CDO Rubber would not
have enough cash to pay off debt○Production Risk – inability of CDO
Rubber to supply goods contracted by buyer
○Business and Environmental Risk –
Cagayan De Oro Rubber Export, Inc.
Question 3Loan Package○Omnibus Line -------------------- P 10.0M Available as:
Loan Line – For additional capital requirementsExport BP Line– For export payment remittances
○Rate: Prevailing Regular Rate + 1% p.a.○Security: Parcel(s) of Land amounting to P10M; Surety Agreement with Father
Low Interest Rate International Trading Corporation
Break Down:Regular Loan --------------------------------------
P25M
Import L/C Opened ----------------------------- 10M10M was converted to dollars with FX of 51.00
Export Negotiation ------------------------------ 15M
Deposit --------------------------------------------- 5M
APA Report
Asian Rare Metal Corporation
Question 1 Will you recommend the loan? YES, because…
The loan will be FULLY SECUREDMarket for cobalt is ESTABLISHEDNO SUBSTITUTE for cobaltThe business is already at its 5th Year, this would mean they are STABLE
The YES is conditional to regular monitoring of financials and a production report must be submitted annually
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