NEWS>>
Oct 12 1998
10:06AM EDTFROM: Actrade International, Ltd.
7 Penn Plaza
New York, NY 10001 -- Tele.: (212) 563-1036 ext. 239
Investor Relations Contact: Mitch Menik
Rubenstein Associates, Inc.
Public Relations -- Tel.: (212) 843-8063
Contact: Jon Goldstein
___________________________________________________________________
ACTRADE'S NEGOTIABLE INTERNATIONAL CHECK
TO GIVE IMPORT-EXPORTERS A NEW FINANCE OPTION
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Financial Tool Will Provide Enhanced Liquidity for Sellers
and Flexible Credit Terms for Buyers
NEW YORK, October 12, 1998 -- In an international business environment where
credit has become increasingly tight and liquidity appears to be drying up
rapidly, Actrade International, Ltd. (NASDAQ: ACRT), today announced that it
has developed a financial tool to expedite payment and limit credit risk for
exporters and provide extended, often unsecured credit for importers. The
company is expected to begin test marketing the product shortly with a formal
launch scheduled for the first quarter of 1999.
Actrade's Negotiable International Check (NIC) will provide many of the same
benefits to import-exporters as the company's popular Trade Acceptance Draft
(TAD) Program does to buyers and sellers of goods in the U.S., along with
crucial currency rate protection for exporters. There is currently a patent
pending on the NIC.
The NIC product is very similar to Actrade's patented TAD Program. A TAD is a
negotiable note signed by the buyer of goods and made payable to the seller.
Once the buyer signs the TAD, the commercial transaction is complete
(virtually
eliminating product disputes) and the receivable has been converted into an
insured financial instrument, which is purchased by Actrade.
An NIC is essentially a TAD -- designed for international trade -- drawn on
the
paying currency (importer's currency) and made payable in the dominant
currency
(exporter's currency). NICs, like TADs, will serve to formally close the
commercial transaction between buyer and seller. NIC drafts will be sold to
Actrade by the seller (the exporter), who will receive full payment within 72
hours and carry virtually no credit risk. The buyer will be able to obtain
extended credit terms.
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ACTRADE'S NEGOTIABLE INTERNATIONAL CHECK -- 2
In addition, the buyer (importer), not the seller and not Actrade, is
responsible for any financial impact caused by fluctuation in currency. An
exporter receives a locked-in currency rate for its receivables, specifically
determined when the NIC is signed by the importer.
“Our extensive experience with the TAD Program in the U.S. has shown that
there
is a perpetual need by sellers for immediate liquidity and commercial closure
of a business transaction, and by buyers for extended and unsecured credit
terms,” said Actrade International Chief Executive Officer Amos Aharoni.
“Actrade's NIC should effectively respond to these legitimate financial needs
that are just as prevalent in international commerce as they are in domestic
circles.
“The current global economic environment, with sellers of goods hitting longer
delays in receiving payment and buyers very often facing unrealistically
stringent credit criteria, only underscores the need for a financial tool like
the NIC,” Mr. Aharoni noted. “Basically, this is a sound vehicle to
facilitate, expedite and simplify trade between companies in developed nations
by cutting through unnecessary confusion and separating the good receivables
from the bad.”
Mr. Aharoni said that the unique structure of the NIC, similar to a TAD,
allows
the seller to receive payment for its receivable immediately and face limited
credit risk. Actrade, which acts as the conduit in the transaction, takes on
little if any risk because of the extensive preliminary credit research it
undertakes and ultimately, its method of debiting receivables directly from
the
buyers' bank account.
Furthermore, Mr. Aharoni explained that a critical part of Actrade's decision
whether to purchase a TAD, or in this case, an NIC, is the credit
worthiness of
the buyer. Actrade will only participate in a particular transaction if it
fits within the parameters set by its credit insurance company. “As a
company,
we have made a conscious decision to keep our own risk to an absolute minimum,
by conducting business aggressively, but with a secure safety net always in
place,” he added.
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ACTRADE'S NEGOTIABLE INTERNATIONAL CHECK -- 3
Actrade Capital Canada
With an eye towards test marketing and ultimately facilitating the NIC
marketing and administrative process in Canada, the company has established
Actrade Capital Canada, Inc., which will be based in Toronto, announced
Actrade
International Chief Operating Officer and Chief Financial Officer Alexander
Stonkus.
“Although an exporter can be located anywhere in the world, Actrade will only
purchase an NIC if the importer is in a country where Actrade has credit
research capabilities,” Mr. Stonkus said. “The opening of our Toronto office
will allow Actrade to do the necessary credit due diligence with importers
throughout Canada.”
Mr. Stonkus indicated that Canada was a logical starting point to market
NICs.
“Since Canada is America's biggest trading partner and has a banking system
similar to the U.S. system, we are extremely optimistic about the prospects a
financial tool like the NIC will have there in the coming years,” he pointed
out.
According to Mr. Stonkus, Carl R. Szamosvari has been appointed president of
Actrade Capital Canada and will be responsible for all company operations in
Canada, including the marketing of the new NIC product.
Mr. Stonkus also mentioned that as a possible next step for marketing the NIC,
the company will consider whether to establish a presence in the United
Kingdom.
Based in New York City, Actrade International Ltd., through its wholly owned
subsidiaries, provides innovative financial services for U.S.-based buyers
and
sellers of goods and services and for exporters and importers. Actrade
International Corp. and Actrade SA provide outsourced international trade and
finance services. A newly established international division, Actrade
Resources, Inc., will develop and provide financing tools for companies
trading
outside the United States and for American exporters. Actrade Capital Canada,
Inc., based in Toronto, will focus on the financing and trading needs of
Canadian-based companies.
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