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Apr 25, 2023 483 likes •849 views

SLIDE 1

COLLATERAL CONTROL SERVICES FOR BANKS, TRADERS & SUPPLIERS

www.aceglobaldepository.com

SLIDE 2

COLLATERAL CONTROL SERVICES

CONTENT

ACE Global Introduction and Services………………………………3-12 Transactional Finance Risk & Mitigants……………………………13-20 Business Process and Overview……………………………………21-24 E5C- IT System……………………………...………………………..25-29 Legal Appraisal and Definitions……………………………………..30-32 Group Contact Details………………………………………………..33-34

SLIDE 3

COLLATERAL CONTROL SERVICES

Structured trade finance and supplier credit requires effective monitoring, control and protection of title to goods, receivables and documents at all times during the transaction cycle. ACE GLOBAL DEPOSITORY and its affiliates have developed strategic partnerships with banks and vendors since 1996 to deliver on-site trading asset management services worldwide through our

ffices in 46 countries.

Today we deliver bonded, cost-effective services appropriately designed to optimize our client’s business objectives to either enhance their market share, reduce costs while mitigating client and suppliers risks along their supply chain ACE GLOBAL DEPOSITORY (ACE GLOBAL) is a leading Collateral Control organisation and provides sophisticated collateral control services using adequate credit support tools relevant in respect of field warehousing, collateral management, secured distribution, certified inventory control services and certified accounts receivable services, as well as field audits, inspection, monitoring, all to an international clientele. Our team comprises of operational experts , bankers, credit support personnel, legal advisors, financial officers and chartered accountants supported by the physical presence and field expertise of a worldwide network of trained inspectors, providing unique service in the field of international collateral risk management. Through its world-class systems and staff, ACE GLOBAL is able to identify and secure the weak links in value chains – or design whole and entirely secured value chains for the account of its partners in any location. 3

SLIDE 4

COLLATERAL CONTROL SERVICES

ACE GLOBAL – A Snapshot

FACTS

Present in 46 countries worldwide
Have provided Collateral Control and asset Management

to 172 financial institutions

Total assets in custody in excess of US$ 9 billion
More than 4,800 employees

HISTORY

ACE GLOBAL, an international Collateral Control Company

created in 1996 to assist :  Banks, Financial Institutions to mitigate their transactional risks inherent in local, regional and international trade.  Emergent Countries to make safe the revenues from taxes and special taxation

ACE GLOBAL commenced its operations in Uganda in
1996. By end of the year, ACE GLOBAL was present in 5

countries in Southern and East Africa.

From 1999 to 2008, ACE GLOBAL extended its activities in

17 countries.

Since 2009, ACE GLOBAL has expanded its network for

another 26 countries.

ACE GLOBAL’s near term target is to establish its presence

in Eastern Europe and Central Asia.

Currently own laboratories in 5 countries and is investing

in new laboratories.

International Certification : ISO 17020:2011 and ISO 9001:
2008. Grain and Feed Trade Association (GAFTA) & The

Federation of Oils, Seeds and Fats Association (FOSFA) members. 4

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COLLATERAL CONTROL SERVICES

ACE GLOBAL - Operations

Operation through ACE subsidiaries, affiliates and associates Operations through Agents 1. Angola 2. Albania 3. Argentina 4. Benin 5. Brazil 6. Burkina Faso 7. Burundi 8. Cameroun 9. Central African Republic 10. Cote d’Ivoire 11. Democratic Republic Congo 12. Dubai (UAE) 13. Djibouti 14. El Salvador 15. Ethiopia 16. Egypt 17. Gambia 18. Ghana 19. Guinea-Bissau 20. Guinea Conakry 21. India 22. Indonesia 23. Kenya 24. Liberia 25. Malawi 26. Mali 27. Mauritania 28. Mozambique 29. Morocco 30. Niger 31. Nigeria 32. Pakistan 33. Rwanda 34. Senegal 35. Sierra Leone 36. Singapore 37. Somalia 38. South Africa 39. Sudan 40. Switzerland 41. Tanzania 42. Thailand 43. Togo 44. Turkey 45. Uganda 46. Vietnam 47. Zambia 48. Zimbabwe 1. Australia 2. Belgium 3. Bulgaria 4. Bangladesh 5. Canada 6. Estonia 7. France 8. Germany 9. Greece 10. Italy/Chypre 11. Jordan 12. Libya 13. Lebanon

14. Mexico

15. Mauritius 16. Madagascar 17. Portugal 18. Romania 19. Saudi Arabia 20. Spain 21. Syria 22. The Netherlands 23. Tunisia 24. Russia 25. Ukraine 26. USA 27. Venezuela

Company incorporation under process Bahrain, Saudi Arabia, Romania, Panama, Kingdom of Lesotho, Chad, El-Salvador, Tajikistan

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COLLATERAL CONTROL SERVICES

ACE GLOBAL – Professional Liability Insurance Cover

To indemnify the insured against legal liability, costs or

expenses arising out of insured’s operation

Area covered: Worldwide
Limit
f

liability: The highest Professional Indemnity Insurance (PI) in the industry, per event and per occurrence.

No claims made on PI since inception (20 years)

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COLLATERAL CONTROL SERVICES

SLIDE 8

COLLATERAL CONTROL SERVICES

Financing and Structuring Opportunities – ACE GLOBAL Services

SLIDE 9

COLLATERAL CONTROL SERVICES

ACE GLOBAL - Collateral Control Services

ACE GLOBAL provides a “One-Stop Shop” across the commodity value chain.

ACCS

Cro p F ina nc e

a nks/ Silo s

Shipping
Ra il
Pipe line s
Re fine rs
Mills
Crushe rs
F

a c to rie s

Bre we rie s
T

a nks/ Silo s

Shipping
Ra il
Pipe line s
Distrib utio n
E

nd Use rs E xisting re la tio nship

T a x a nd Duty c o lle c tio n

Local/Region al Producers Transport/Lo gistics Transformers Transport/Lo gistics Exporters/ Importers Traders Countries

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COLLATERAL CONTROL SERVICES

ACE GLOBAL – Solutions

Financial Structuring services Commercial Engineering services Operational Risk Management services General Services

Structured Trade

and Commodity Financing

KYCC services
Commodity

profile

Contract Farming

Services

Trade Flow

Facilitation

Commodity Pricing
Supervising Aid

management

Field Warehousing
Collateral Management
Secured Distribution
Certified Inventory Control
Certified Accounts Receivable

Services

Monitoring
Field Audit and Inspection
Consultancy
Advisory
Legal
Training

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COLLATERAL CONTROL SERVICES

Se r vic e s

ACE GLOBAL conducts its own legal due diligence in respect of bespoke services offered viz. – Field Warehousing: is essentially a method whereby a borrower’s trading assets are used as security at the borrower’s own premises for a loan or financing. It is a security instrument which enables the borrower, to deliver to the Bank legally valid documents of title and to grant a possessory pledge over goods stored in the borrower's

wn plant, mill, refinery or warehouse via the legal principle of Bailment. In order for a field warehouse and the

lien created thereby to be recognized as valid, the possession of the Collateral Controller must be “exclusive, notorious and continuous.” All the ACE GLOBAL operating procedures have been devised to comply with this standard. – Collateral Management: Under Collateral Management operations, the storage premises are owned and

perated by an independent third party without the influence of the borrower. Field Warehousing and Collateral

management agreements hence differ inter alia, on the basis of the ownership, control and release mechanism within storage facilities. Under collateral management it is therefore essential to devise a methodology for maintaining control, custody and possession and for effecting release, all of which binds the third party to the Collateral Controller as per the mechanism agreed by the Bank. In such Collateral Management Operations, it is this third party which is the original goods father in respect of such goods i.e. on behalf of the owner of the goods which first deposits the goods with the third party for storage. – Secured Distribution Services: This a specialized type of Field Warehousing developed to service the needs of suppliers of commodities who wish to retain ownership of the inventory they supply, or to have a possessory lien

n the goods till such time that payments are received in full against such inventory, and to regulate the delivery
f the inventory to the Buyer. This service has been developed by ACE GLOBAL to service both the Suppliers’

needs as well as the Buyers’ needs and the Agreement is adjusted accordingly based on the operational requirements. 11

SLIDE 12

COLLATERAL CONTROL SERVICES

Contd.

– Certified Inventory Control : This is a service used by companies who would like to avail financing from banks but not by pledging their stocks specifically for this financing. Under Certified Inventory control, the company, ACE GLOBAL and the bank enter into a tripartite agreement. Since no lease is taken under Certified Inventory Control (as compared with field warehousing), the agreement provides that ACE GLOBAL shall have full right of ingress and egress to premises where inventory is stored, and that ACE GLOBAL shall have access to any of the company’s inventory records which are necessary to render its service. The banker has ACE GLOBAL’s certificate to the extent that its reports are accurate and that the assets being controlled will not fall below an agreed minimum level. ACE GLOBAL will deliver to the Bank periodic reports and inventory certificates as and when required by the Bank. – Certified Accounts Receivable Services : A company’s book debts may be worth as much or even more than the stocks so any monitoring ACE GLOBAL provides would be enhanced by their inclusion. This can be done by employing many of the same techniques used in Certified Inventory Control. ACE GLOBAL’s survey for example, would include the handling of book debts as well as stocks. ACE GLOBAL then examines the company’s books, verifies the balance if necessary, prepares an ageing analysis and includes its findings on the first Collateral Control Certificate and all changes on the subsequent Certificates – Stock Monitoring and Inspection Services : Under this Arrangement, the Bank appoints ACE GLOBAL to monitor and inspect the physical and where required, the documentary handling of the Goods. ACE GLOBAL provides these services for the account of the Bank and the role of ACE Global is solely one of logistical monitoring and inspection. In order for ACE GLOBAL to be responsible or liable for the condition, quality, management or control of the Goods, ACE GLOBAL will adopt the more appropriate Collateral Control Agreements and not a Stock Monitoring Agreement. 12

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COLLATERAL CONTROL SERVICES

TRANSACTIONAL FINANCE RISK & MITIGANTS

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COLLATERAL CONTROL SERVICES

 Transactional financing structures necessitate either full ownership with stock carried on the Lender’s balance sheet or registered possessory pledge over collateralized stock (dependent on Legal requirements per country)  Ownership evidenced by stock confirmations in form of a Warehouse Receipt  A thorough understanding of demand or supply dynamics in each operating country.  Commodity Risk: Storage dynamics, Price, Quality , Weight and Quantity  SCF Product Solutions covers the entire supply chain from Off taker, Transport to destination, Processor, Producer (foreign and/or local)  Comprehensive All risks Cargo Insurance covers risk of ownership in storage and in transit Plus Misappropriation plus FOG and FOQ  Comprehensive PI and Fraud from the Collateral Controller  Adequate Middle Office to ensure accurate monitoring of market prices, stocks and portfolio management

Str uc tur e d Commodity F inanc e F undame ntals

SLIDE 15

COLLATERAL CONTROL SERVICES These commodity markets have their own peculiar features, including:

Seasonal fluctuations in prices;
Differential in prices of different grades, weight and quality of a given kind of commodity;
"Differential" of the same grade, weight and qualities in different marketing centres;
Hazards of deterioration in value during storage due to time, quality and weight;
Unpredictability timing of deliveries due to inland transport and port congestion;
Risk of deterioration in the quality of the commodity to which the sales contracts are related;
Risk of volatility of the price of the commodity even when the desired quality is unchanged;
Disparities in the quantity and weight of the commodity;
Adequacy of insurance to cover the goods whilst in storage and in transit and which can be claimed in convertible

currencies offshore;

Legal risks involving inadequate commercial law legislation and insufficient legal systems to ensure collateral

controls during the value chain;

Risks arising from logistical problems from transport system failures, poor storage facilities, etc

T r ansac tion Pe r for manc e Risks

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COLLATERAL CONTROL SERVICES

Risk Ar e a Risk L ike ly Ca use Pr e ve nta tive a c tion

1. Co mmo dity 1. Gra de / Qua lity infe rio r

1. Misre pre se nta tio n 2. Inc o rre c t a sse ssme nt 3. Ina de q ua te ha ndling pro c e dure s 4. We ig hb ridg e no t c a lib ra te d a c c ura te ly 1. Inspe c tio n b y Co lla te ra l Ma na g e r 2. Ana lysis b y inde pe nde nt la b o ra to ry 3. Ca lib ra tio n o f e q uipme nt b y Co lla te ra l Co ntro lle r 4. Inte rna tio na l sta nda rds use d fo r a na lysis 5. Ce rtific a te o f we ig ht a nd Ana lysis issue d b y Co lla te ra l Co ntro lle r

2. Mo isture

1. Inspe c te d inc o rre c tly 2. Me a sure d inc o rre c tly 3. E xpo sure to e le me nts prio r to lo a ding 4. Clima tic c o nditio ns 5. Infe rio r Sto ra g e c o nstruc tio n 1. Co lla te ra l Co ntro l E ng ine e rs issue Ce rtific a te o n Sto ra g e struc ture 2. Sto ra g e Ag re e me nt de fine s re spo nsib ility 3. Insura nc e Co ve r 4. Ce rtific a te o f Ana lysis issue d b y Co lla te ra l Co ntro lle r

3. Inse c t infe sta tio n

1. Misre pre se nta tio n 2. Inc o rre c t inspe c tio n 3. Infiltra tio n 4. Infe rio r Sto ra g e c o nstruc tio n 5. c ro ss c o nta mina tio n 6. Pro ximity o f infe ste d lo ts 1. Sto ra g e Ag re e me nt de fine s re spo nsib ility 2. Insura nc e Co ve r 3. Inspe c tio n b y Co lla te ra l Co ntro lle r o n fo rtnig htly b a sis 4. F umig a tio n o n re c o mme nda tio n fro m Co lla te ra l Co ntro lle r

4. De fe c tive

title / c o unte rfe it title do c ume nts/ Bo rro we rs re puta tio n 1. F ra ud b y Supplie r/ Sto re r 2. Co mmo dity sto le n 3. Dispute o ve r o wne rship o f c o mmo dity 1. Ba nk ho lds o rig ina l do c ume nts o f title 2. Sto ra g e a g re e me nts with sto re rs 3. Supplie r wa rra nts full title 4. Supplie r is a lso sto re r in ma jo rity o f c a se s 5. Co untry Ma na g e r thro ug h K YCC will de te rmine the Cre dib lity o f the b o rro we r

5. we ig ht sho rta g e

1. Ina de q ua te e q uipme nt 2. fra ud/ sto re r de via ting g o o ds 3. we ig htsc a le no t c a lib ra te d 4. Silo sc a le s no t c a lib ra te d 5. Ba d ha ndling fa vo ring spilla g e 1. upda te d c a lib ra tio n c e rtific a te 2. Co untry Ma na g e r will c he c k fo r po ssib le b y-pa sse s 3. Co untry Ma na g e r will re q ue st re g ula r te st we ig hing 4. we ig hing unde r surve illa nc e o f L

c a l Co lla te ra l Ma na g e r o n

b e ha lf o f ACE GL OBAL 5. Co untry Ma na g e r to issue pro te st le tte r

6. he a ting & se lf

c o mb ustio n 1. De fe c tive lig htning o n b o a rd ve sse l ho lds 2. to o hig h mo isture 3. fre sh g o o ds 4. po o r ve ntila tio n 5. la c k o f fo llo w up 1. c he c k o n ve sse l e le c tic de vic e s 2. mo isture te sting o n a rriva l 3. re g ula r te mpe ra ture te sting 4. pro pe r a nd a de q ua te ve ntila tio n 5. Co untry Ma na g e r re g ula r mo nito ring 6. Insura nc e c o ve r

7. da ma g e to the

g o o ds 1. ma lic io us 2. F

rc e ma je ur

3. le a ka g e / wa te r infiltra tio n 4. b a d sto ra g e c o nditio ns 1. pe rma ne nt pre se nc e o f L

c a l Co lla te ra l Ma na g e r o n b e ha lf o f

ACE GL OBAL 2. pro pe r inspe c tio n o f wa re ho use 3. Insura nc e c o ve r

Risk Mitigation approach

SLIDE 17

COLLATERAL CONTROL SERVICES

Risk Ar e a Risk L ike ly Ca use Pr e ve nta tive a c tion

2. Co mmo dity Sto ra g e
1. L
ss o f c o mmo dity

1. L a c k o f c o ntro ls 2. Inc o mpe te nt pe rso nne l 3. Co llusio n b e twe e n Co lla te ra l Ma na g e r & Sto re r 4. F

rc e Ma je ure

5. We ig ht re c o rding inc o rre c t 6. Sto re d to o lo ng - c o mmo dity spo ile d 1. Co lla te ra l Co ntro lle r inde pe nde nt c o ntro ls ve rific a tio n 2. T he L e nde r Insura nc e c o ve r 3. Co lla te ra l Co ntro lle r q ua ntity & q ua lity c e rtific a te s re ta in a s pro o f o f va lue a nd e xsista nc e 4. Sto ra g e pe rio d limite d to 12 mo nths

2. Da ma g e to Co mmo dity

1. Sto ra g e fa c ilitie s sub sta nda rd 2. Ma npo we r re q uire me nts ina de q ua te 3. T he ft o r Misa ppro pria tio n 4. F

rc e Ma je ure

5. Spo nta ne o us Co mb ustio n 1. Co lla te ra l Co ntro l E ng ine e rs Re po rt 2. Sto ra g e a g re e me nt de fine s re spo nsib ility 3. Insura nc e c o ve r 4. Co lla te ra l Co ntro lle r re g ula r inspe c tio ns

3. Sto re d c o mmo dity

infe c te d/ c o nta mina te d with dise a se - Ba nk se lls to e nd use r with sub se q ue nt c la im fo r da ma g e s 1.

1. Inse c t infe sta tio n

2. F

ung i c o nta mina tio n 3.

3. mo uld

4. Pro ximity o f infe ste d lo ts

1. Ba nk ha s ta ke n o ut insura nc e (Pub lic L ia b ility ) 2. Co untry Ma na g e r re g ula r inspe c tio ns 3. Re fuse pro ximity / Pro pe r se pa ra tio ns 4.wa re ho use no t c o ve re d b y insura nc e 1. wa re ho use insura nc e no t pro pe rly c he c ke d 2. pre mium no t pa id 3. insure d va lue to lo w 4. De duc tib le to hig h 1. Pro pe r c he c k o f insura nc e Po lic y 2. Co nfirma tio n fro m unde rwrite r tha t pre mium ha s b e e pa id

Risk Mitigation approach

SLIDE 18

COLLATERAL CONTROL SERVICES

Risk Ar e a Risk L ike ly Ca use Pr e ve nta tive a c tion

3. Sto re r
1. No n pe rfo rma nc e to

ma inta in a nd sto re the c o mmo dity 1. F ina nc ia l fa ilure 2. Sto ra g e fa c ilitie s sub -sta nda rd 3. Ma npo we r no t q ua lifie d to ma na g e sto ra g e 4. Cha ng e s in sta tuto ry limita tio ns 1. Co lla te ra l Co ntro lle r le a se s Sto ra g e / wa re ho use 2. Sto ra g e a g re e me nt with sto re r sta te s tha t the L e nde r is the o wne r o f the c o mmo dity 3. F ull c o mmo dity insura nc e c o ve r ta ke n b y the L e nde r

4. Cre dit
1. No n-pe rfo rma nc e o f

pa yme nt 1. Clie nt una b le to pa y / inso lve nc y 2. E c o no mic do wnturn 3. Ca sh flo w diffic ultie s/ fina nc ia l distre ss 4. Che q ue no t c le a re d 1. Cre dit a ppro va l o n o ff-ta ke r, a nnua l c re dit re vie w 2. Co mmo dity he ld a t disc o unt to ma rke t va lue fo r Intrinsic Va lue 3. T he L e nde r o wns c o mmo ditie s 4. No ne L e nde r a c c e pte d c lie nts must first e ithe r pre se nt b a nk g ua ra nte e d c he q ue s o r pa yme nt to b e c le a re d

5. Co mmo dity Va lue

(Sa le )

1. Dro p in pric e o f c o mmo dity

1. Ove rsupply 2. E c o no mic Do wnturn 1. Ba c k to Ba c k Sa le a nd Purc ha se a g re e me nt. 2. He dg e purc ha se pric e o r use a ppro pria te disc o unting mo de l 3. Use a ppro pria te disc o unting mo de l, institute trig e r pric e le ve ls

6. Co mmo dity Va lue

(Purc ha se )

1. Inc o rre c t c a lc ula tio n o f c o st

b y c lie nt

2. Inc o rre c t c a lc ula tio n o f

purc ha se pric e b y Ba nk 1. Ina b ility o f c lie nt to c a lc ula te a nd inc lude a ll c o sts a c c ura te ly 2. Disc o unt mo de l fla we d 1. Ba nk to re vie w a ll o rde rs a nd c a lc ula tio ns 2. Ge ne ric Disc o unting Mo de l - Any va ria tio ns to b e a ppro ve d b y Ba nk line ma na g e me nt

7. Pric ing

1. Una c c e pta b le re turn o n Ca pita l 2. Cha ng ing inte re st ra te s 1. Inte re st ra te c ha ng e 2. Cha ng e in sta tuto ry re q uire me nts 3. F unding a sho rt te rm a dva nc e with lo ng -te rm funds 1. Ra te linke d to Prime 2. F unding to b e de te rmine d b y ma na g e me nt

n a c a se b y c a se b a sis

3. Atte mpt to lo c k in ra te with a sho rt te rm instrume nt 4. Ge ne ric Disc o unting Mo de l - 3% he dg e

8. Ope ra tio na l (Ba nk)

1. F ra ud / Misa ppro pria tio n 2. Ina de q ua te c o ntro ls 3. Sta tuto ry 4. Do c ume nta tio n 5. Ad ministra tio n 6. Info rma tio n T e c hno lo g y 1. Ina de q ua te inte rna l c o ntro ls 2. Bre a kdo wn in b a sic c o ntro ls 3. Cha ng e s to Ac t a nd Re g ula tio ns 4. Do c ume nta tio n no t le g a lly b inding 5. Ad ministra tive b urde n to o b ig fo r a dministra tive de pa rtme nt 6. Ad min syste m inc o mpa tib le 1. Se g re g a tio n o f dutie s 2. Audit func tio ns (Inte rna l & E xte rna l) 3. Appro ve do c ume nts thro ug h L e nde rs L e g a l de pa rtme nt 4. Re vie w a dmin pro c e dure s 5. Inc re a se c a pa c ity to ha ndle wo rklo a d 6. Struc ture d T ra de & Co mmo dity F ina nc e syste m de sig ne d to mitig a te a sso c ia te d risks

Risk Mitigation approach

SLIDE 19

COLLATERAL CONTROL SERVICES

Risk Ar e a Risk L ike ly Ca use Pr e ve nta tive a c tion

9. Insura nc e
1. F

unding pro vide d witho ut a de q ua te insura nc e o n Ba nk

wne d c o mmo dity
2. Insura nc e Co una b le to

me e t its o b lig a tio ns

3. L
w c la ss c o mpa ny

1. Insura nc e ina de q ua te 2. Insura nc e no t in pla c e 3. Insure r o ve r e xte nde d 4. wro ng va lue insure d 5. to o hig h de duc tib le 6. Insura nc e Co mpa ny No t re lia b le 1. Re c o g nise d insura nc e c o mpa ny to b e use d 2. Ba nk to mo nito r insura nc e pre miums 3. Othe r Insura nc e Co mpa nie s to b e a ppro ve d b y Ba nk 4. de dic a te d pe rso n to fo llo w ma rke t 5. de dic a te d pe rso n to re vie w insura nc e

10. T

a xa tio n

1. No t a ta x b a se d tra nsa c tio n

Risk Mitigation approach

SLIDE 20

COLLATERAL CONTROL SERVICES

ACE – Key Processes

Site Inspection
Know Your Client’s Customer and all stakeholders (including transporter, storer and processor)

for each transaction

Deal specific Commodity Profile
Warehouse Inspection
Each service is broken into three steps:

– Pre Deal and Deal Approval process

Design sequence of events
Identify risks and mitigants from Bank point of view

– Execution

Maker /Checker concept with approvals by CSM

– Administration and Reporting

Independent issuance of WHR and RO
Independent reporting and tracking
Loan justification
Mandatory Credit Support approval

SLIDE 21

COLLATERAL CONTROL SERVICES

BUSINESS PROCESS & OVERVIEW

SLIDE 22

COLLATERAL CONTROL SERVICES

ACE GLOBAL & Lenders - Synergies

ACT ORS SUPPL IE R L OCAL AGE NT PORT E XPORT E R OF F

AKE R ST E PS

De live ry o f Ra w Ma te ria l

Wa re ho using Pro c e ssing Wa re ho using

T ra nsit

Wa re ho using L

a d ing

E xpo rt/ Shipm e nt

Re c e iva b le s

T YPE OF F INANCING

Ra w Ma te r ia l F ina nc ing Wor king Ca pita l F ina nc ing (T

lling )

E xpor t Pr

duc t F

ina nc ing Re c e iva ble F ina nc ing

E XPORT GRADE PRODUCT WARRANT S

COL L AT E RAL

RAW MAT E RIAL WARRANT S SHIPPING DOCUME NT S

RISKS

Supplie r Pe rfo rma nc e Qua lity/ Qua ntity/ We ig ht

Supplie r/ Pro c e ssing Pe rfo rma nc e

Ca rrie r Pe rfo rma nc e

T e rmina l Pe rfo rma nc e

Ca rrie r Pe rfo rma nc e

PAYME NT

MIT IGANT S

ACE SUPE RVISON MONIT ORING ACE COL L AT E RAL MANAGE MENT 1st Cla ss Offta ke r o r Se c ure d Pa yme nt Instrume nt Pla nt Ma na g e me nt / T e c hnic a l Assista nc e E xpo rte r/ Ca rrie r E xpe rtise , Re puta tio n & T e c hnic a l Suppo rt

SLIDE 23

COLLATERAL CONTROL SERVICES

ACTORS SUPPLIER LOCAL AGENT PORT EXPORTER OFF-TAKER

STEPS Delivery of Raw Material Warehousing Processin g Warehousing Transit Warehousing Loading Export/Shipment Receivables

TYPE OF FINANCING Raw Material Financing Working Capital Financing (Tolling) Export Product Financing Receivable Financing EXPORT GRADE PRODUCT WARRANTS COLLATERA L RAW MATERIAL WARRANTS SHIPPING DOCUMENTS

RISKS

Supplier Performance Quality/Quantity/Wei ght Supplier/Processing Performance Carrier Performance

Terminal Performance

Carrier Performance

PAYMENT

MITIGANTS ACE SUPERVISON MONITORING ACE COLLATERAL MANAGEMENT 1st Class Offtaker or Secured Payment Instrument Plant Management / Technical Assistance Exporter/Carrier Expertise, Reputation & Technical Support

ACE GLOBAL & Lenders - Synergies

Lender’s CONVENTIONAL SCOPE ACE GLOBAL’s SCOPE

SLIDE 24

COLLATERAL CONTROL SERVICES

SLIDE 25

COLLATERAL CONTROL SERVICES

E5C – Enhanced Collateral Commodity Credit Control Capacity

SLIDE 26

COLLATERAL CONTROL SERVICES

Real time access to the location
Weight, quality and quantity of commodities
Single

point

interface between the lender, the borrower and the value chain

Enabling the lender to monitor asset based and asset

conversion lending through market to market evaluation Spans the entire value chain beginning with the post harvest stage and encompasses the processing & movement of commodities with lenders. It gives lenders comfort through:

E5C – Enhanced Collateral Commodity Credit Control Capacity

SLIDE 27

COLLATERAL CONTROL SERVICES

Guarantees / Certifies the Collateral
Facilitates end-to-end (Value Chain) Trade Finance
Facilitates Collateral Transfer
Risk Assessment
Escrow Agent Facilities
Facilitates Settlement on Exchanges – guarantees

delivery system

Issues of Electronic Warehouse Receipts
Mitigates Performance Risk
Supports parastatal bodies’ revenue collection

Its Core Functions:

E5C - A Unique Solution to mitigate Performance Risk & Secure Transactions

SLIDE 28

COLLATERAL CONTROL SERVICES

ACE GLOBAL: E5C and approval process

RSM, TSSM, CSM, and LM: prepare the specific check list TSSM: Conduct storage location inspection FM: Receive Transaction Details and prepare cost sheet RSM: Prepares CPS and CSAR with CSM/TSSM RSM: creates and Initiates deal in E3C, Upload CPS, CPL, KYCC, CSAR, Term Sheet and RSMR LM: Uploads draft contract and related legal docs

Approved

CM: Amends and send back to GCSM RSM: Receive Indicative Term Sheet/ Complete ACE Global Bank Questionnaire/Prepare KYCC LM: Prepare CPL, Legal Opinion and Draft contract CM: Approval request RCM: Approval request

Approved

GCSM: Reviews & Analyses deal

Approved

Refer back GTSSM: Reviews & Analyses deal

Approved

Refer back CM: Amends and send back to GTSSM GLM: Confirms final draft contract, Local LM uploads docs. GFM: Reviews and Analyses deal CM: Amends and send back to GFM

Approved

Refer back GLM: Assess deal

Approved

Refer back CM: Amends and send back to GLM GRSM: Reviews and Approves GHR: Approves and notifies CEO CEO: Approves or Rejects deal

Approved SO: Notifies CM of Deal Approval by allocating back the deal to the CM.

CM: Allocate deal to CSM CSM: Assigns Deal to CSO and TSM, who in turn allocates deal to a supervisor and inspector Deal is now active and in Execution

*Please note, deal can only be rejected at the group level LEGEND: RSM: Relationship Manager LM: Legal Manager CSM: Credit Support Manager CSO: Credit Support Officer TSSM: Technical Support Services Manager FM: Finance Manager CM: Country Manager RCM: Regional Country Manager SO: Security Officer G: Group

Refer back CM: Amends and send back to CEO

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COLLATERAL CONTROL SERVICES

ACE GLOBAL: E5C Deal Life Cycle

1. Deal Creation
2. RM Checklist
3. TSS Checklist
4. CSM Checklist
5. Legal Checklist
6. FM Costsheet
7. RM –

Documentation

8. TSS – Risk Matrix
9. CSM – Deal

Structuring

10. Legal – Contract
11. CM Approval
12. Group Level

Approvals and Checklist Finalization SO – Allocation TSS, CSM – Allocations Execution

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COLLATERAL CONTROL SERVICES

LEGAL APPRAISAL AND DEFINITIONS

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COLLATERAL CONTROL SERVICES

Impor tant De finitions:

“Bailment”- The transfer of the possession of Goods by the owner (bailor) to another (the bailee) which shall thereafter maintain notorious,

continuous and exclusive possession of all the Goods, for particular purposes such as hiring, financing, pledge of goods, and the delivery of Goods for carriage, safe custody or repair. – Notorious possession is evidenced by numerous conspicuous signs placed by ACE GLOBAL at the storage premises.; Continuous and exclusive possession is assured by the fact that ACE GLOBAL has one of its employees or agents or representatives on duty at all times when the premises are unlocked and that anyone permitted to enter the premises does so only at the will of ACE GLOBAL or with its consent. – The foregoing steps accomplish an effective change in the possession of the goods and premises. Thereafter, warehouse receipts may be issued at the borrower’s premises in respect of Goods stored therein and the constructive possession of the Goods is maintained by ACE GLOBAL for and on behalf of the lender / Bank throughout the duration of the financing and till the goods are required to be released.

“Collateralized loans”- Collateral is a synonym for security provided in order to secure an obligation. Bankers ask for collateral on a loan as a

measure of added security. This is to give the Bank’s claim against the enterprise a preferred position with respect to repayment if the enterprise should fail to honour the loan.

“Pledge”- This is the act of depositing property of some sort with a lender with the intention that it be held by the lender as collateral to

insure repayment of the loan. When a borrower furnishes the lender collateral to strengthen a loan and provides security for its obligations under the financing extended by the lender, the borrower, is said to have pledged the collateral to the lender. In that:

– The person depositing the property with the lender, (the borrower) is referred to as the pledgor, while the person in whose favor the pledge is executed is called the pledgee (the lender). – There can be no pledge without obligation. The pledge is the agreement which relates a certain deposit property to a certain obligation, as a result of which that property becomes collateral to that obligation. – In order to render the pledge effective and to perfect the lien thereunder, the borrower must place the goods into the constructive possession of the lender, whether directly or where agreed, with an independent third party (such as a collateral controller acting on behalf of the Bank) under and pursuant to the legal principles of Bailment.

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COLLATERAL CONTROL SERVICES

Impor tant De finitions Contd.

“Lien” – The right to retain possession of a property until all charges against it are paid.

Types of Liens: – “Possessory Lien ”- When one person holds the possession of another’s property and has to perform services upon it for which he is entitled to remuneration, the said person automatically obtains- by the general principles of law- the right to retain possession of the property until all charges against it are paid. This right is known as a lien. The lien does not give the creditor any rights other than that of retaining possession until the charges have been paid, (unless specifically provided by the agreement). However, some jurisdictions do provide a provision to creditors, or lienor, the right to sell property after a reasonable period in order to get funds with which to pay off the amount owed by the owner of the goods. – “Bank - Pledgee’s lien”– The pledge creates the collateral relationship between the deposit goods and the loan by creating lien upon the goods in favor of the lender a pledge. A Bank-Pledgee’s lien differs from a regular lien in that when a property has been pledged specifically for the purpose of securing an obligation the creditor has the legal right – upon default of the debtor- to sell the property in

rder to obtain funds with which to retire the debt.

– “Warehouseman’s lien/ Collateral Controller’s lien” – The warehouseman/ collateral controller is automatically given a lien upon goods stored under a non-negotiable receipt for all lawful charges for the storage and preservation of the goods; and for the sale of the goods where default has been made in satisfying the warehouseman’s lien. Until his lien is satisfied the warehouseman/ collateral controller may refuse to deliver the goods. If he releases the goods he loses his lien upon them. The lien is limited to the charges arising in connection with the goods covered by a particular receipt.

“Full Outturn Guarantee / FOG”- The insurance coverage extended to differences and shortages in quantities of any Goods under specific terms

and conditions.

“Full Outturn Quality / FOQ”- The insurance coverage extended to defects and differences in quality parameters and/or specifications in any

Goods under specific terms and conditions.

"Misappropriation“ shall mean unauthorized, fraudulent or dishonest appropriation or use, or unexpected or unforeseen or unexplained loss of

the Goods under collateral management / Field Warehousing and /or monitoring and/or storage supervision by ACE GLOBAL and shall, inter alia, include the risk association with fraud, defalcation, misapplication, embezzlement, fraudulent transfer of ownership from the insured interest and dispossession thereof (except that which solely results from a governmental intervention).

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COLLATERAL CONTROL SERVICES

GROUP CONTACT DETAILS

SLIDE 34

Main Re gional Offic e s Contac t De tails

www.aceglobaldepository.com

MENA ACE GLOBAL DEPOSITORY DMCC DUBAI, UAE TEL : +971 4 4539758 : +971 4 4539759 email: info@aceglobaldepository.com INDIA ACE GLOBAL DEPOSITORY (INDIA) PVT. LTD MUMBAI, INDIA TEL: +912228379495 email: info@aceglobaldepository.com EURASIA ACE GLOBAL TURKEY GOZETIM HIZMETLERI A.S ISTANBUL, TURKEY TEL: +90 216 474 17 55 email: info@aceglobaldepository.com SOUTHERN AFRICA ACE GLOBAL ZAMBIA LIMITED LUSAKA, ZAMBIA TEL: +260 211 291768 +260 211 294711 email: info@aceglobaldepository.com EAST AFRICA ACE GLOBAL UGANDA LIMITED KAMPALA, UGANDA TEL: +256 414 233 973 : +256 414 348 425 email: info@aceglobaldepository.com WESTERN AFRICA ACE GLOBAL DEPOSITORY CI ABIDJAN, COTE D’IVOIRE TEL: +225 20 25 48 50 +225 58 09 86 14 email: info@aceglobaldepository.com