COMMODITY TRADING
Oil & Gas and Agricultural Commodities
Our Approach
In 1998 an effective set of guiding rules were developed and over many years they were perfected so the Tader (Buyer-Seller) could apply a safe legal set of standards to act in the position of a professional international trade intermediary with secure, safe, procedures and applications. These rules are founded on the doctrines of English Law, International trade rules of UCP 600 and incorporated in the ICC rules set for Incoterms 2000 and now incoterms 2010.
These rules and regulations are the only effective applications an intermediary can successfully close a deal.
The Law and Practice of International Trade is in every university law library in the world and is our bible when advising or trading.
Quick Facts:
- If the proper procedures for the intermediary are not followed, the deal will never close or even not get to the acceptance of the offer from the end buyer.
2. If an intermediary use the flawed LOI/ BCL/ ICPO/ POP/ MPA/ NCND/ PB/ ASWP documents, they are often an untrained trader that has been misguided by another unskilled and untrained trader.
Procedures (with undisclosed principals).
1-Quote
2-Offer
3-Contract
4-DLC from Buyer
5-PG- from Supplier
6-Delivery
7-Collection is applied for.
The procedures above and below are use by GCE Global and his partners when we controlling the deal (Buyer-Seller). If there are other intermediaries in this group, they have stepped back.
Note: A Intermediary Payment Guarantee (IPA) will be issued by the controlling intermediary to each and every sourcing intermediary in the deal guaranteeing them their commission for assisting in the deal. The (IPA) will stand up in a court of law internationally. The NCND/MPA will not unless the deal is done in your country in your state in your city. Otherwise the NCND/MPA document has no or little value in a court of law.
(a) GCE will RFQ (Request for a Quote) from the Supplier on behalf of our undisclosed End Buyer for his consideration.
(b) If the Supplier accepts the RFQ, the Supplier will send us his “Offer” to sell his product with a quote of price, specification and a validity date.
(c) On our company letterhead, we will send the “Offer/Quote” from supplier and add in our commission to the price and send it to End Buyer for his consideration.
(d) If End Buyer accepts the price “Offer”, the End Buyer will send a “Offer to Purchase” to GCE . This is a binding commitment to the Trading company (To GCE, not to the Supplier). GCE Global is the Buyer/Seller.
Note: GCE is controlling two separate deals. One with the Supplier and one with the End Buyer. So GCE Global is the Buyer and the Seller.
(e) After receiving the (Offer to Purchase) from the End Buyer, GCE will write an “Offer” (Not an ICPO or CPO or anything else) to purchase on his letterhead on behalf of his undisclosed End Buyer to the Supplier.
Note: GCE will not and can not issue a “CPO” (Corporate Purchase Offer) to the Supplier as he is not the Corporation purchasing the product. He is only issuing an “Offer” to purchase on behalf of his undisclosed principal.
(f) If the Supplier accepts the “Offer” from GCE, the Supplier would send a signed contract with his payment request and procedures. If the payment request and procedures are not workable for GCE then we must negotiate until conditions fits our needs.
Note: The only payment method GCE Global can deal with is a UCP600 bank issue Pre Advise Transferable Irrevocable Documentary Letter of Credit. Any other payment outside of the DLC is not workable for a Trader (Buyer-Seller).
With this DLC payment method the End Buyer is protected and the Supplier is also protected. If the Supplier does not fulfill the conditions of the Pre Advise DLC, the DLC can be cancelled. If the Supplier does fulfill the conditions of the Pre Advise DLC the End Buyer can not change his mind and cancel. The deal is financially secured. The Buyer-Seller (GCE) is assured his commission and cannot be circumvented.
(g) After receiving the final contract from the Supplier, GCE will on his letterhead, rewrite, sign using the same procedures of the Supplier (changing the buying price to the selling price) and send his contract to End Buyer for his signature.
*Please remember the commission has nothing to do with the End Buyer or the Supplier. Commission is the difference between the buying price and the selling price. It has all to do with the Trader.
Note: GCE Global has a binding contract from the End Buyer and also a binding contract from the Supplier.
(h) The End Buyer signs the contract and sends it back to GCE. The End Buyer has 7 days to place the DLC into Trader bank account.
Note: It cost very little to apply and place a DLC in the Trader account. The large cost of the DLC is when it is being transferred from the Intermediary’s account to the Suppliers account. GCE ask for a UCP600 instrument to be applied on contract and that all bank charges and transfer/handling fee’s are for the account of the End Buyer.
Note: ICC Uniform Custom and Practice for Documentary Credit (UCP600) Article 38 (c) state: Unless otherwise agreed at the time of transfer, all charges (such as commission, fees, cost of expenses) incurred in respect of a transfer must be paid by the first beneficiary (the Controlling Intermediary is the first beneficiary of the DLC).
(i) After the UCP600 DLC is placed in the bank account of GCE (Trader), the Intermediary signs and sends back the contract he received from the Supplier to the Supplier and transfers the DLC.
Note: GCE does not sign and send back the contract to the Supplier until the DLC is in his account and activated.
Note: Once GCE provides all information of Supplier in possession of the goods to the bank the DLC is activated. The End Buyer can now verify the agreement GCE has with the Supplier and the existence of the goods. The DLC for the price quoted by the Supplier can be transferred from the Traders account to the Suppliers account. (The balance of the DLC is left in GCE account for commission for the company and for other intermediaries who assisted with the deal.)
Note: The DLC does not become money until the balance of the Pre Advise conditions are met by the Supplier.
(j) The Supplier will within three days of the LC, issue a “PG” (Performance Guarantee) or LDD (Late Delivery Discount) as advised as per contract.
(k) The arrival time is advised and goods are delivered on board vessel.
(l) Presentation of SGS, Bill of lading, ship mate’s receipt etc, documents to bank and collection of payment is applied for.
Note: First delivery date is usually 60-90 days or more from (date) schedule and every 30 days there after for every consecutive shipments.
Note: This is a basic outline of the proper procedures as it pertains to GCE Global and his partners when acting as the Merchant/Trader. However, GCE can also act as a facilitator and broker in certain business opportunities and transactions. GCE can also establish long-term cooperation and or partnerships with buyers and suppliers to let principals deal directly.
PRIVATE INVESTMENT – Capital Partners
Our Approach
We are interested in controlling interest but we can also consider in having previous owners or management owning a significant portion of any business we buy. Therefore we are always open to look at JV, Equity Partnerships and other synergistic structures.
We have an appreciation for the personal goals of a business owner and can structure a transaction to meet those goals. If GCE or his partners buys a Company, the entire selling price is usually paid in cash at closing, but the experience of our principals in estate planning allow us to figure out creative ways to keep more money in the hands of the business seller and his or her heirs.
Confidentiality
Discussions with a business owner-seller are completely confidential. Early in the process we will sign a Non-Disclosure Agreement. If we are interested in a deal, we then obtain the seller’s permission to share that information with a small circle of accountants, partners, lawyers, and bankers who will help us review and complete the deal. Employees of the company will not be made aware of a sale until both sides of the potential transaction agree the time is right.
Purchase Process
Each purchase is made quickly to protect customer goodwill and employee morale. The business owner will deal directly with our principals who are the ultimate decision makers. With significant financial resources and no extensive investment committees, we complete transactions swiftly.
Few Business Changes
Each business we buy remains autonomous. Existing employees are retained and historic relationships with accountants, lawyers, bankers, insurance agents and others are maintained whenever possible. We are foremost concerned with not losing the money we put into a business.
Ownership
We do not always enter into the purchase of a business with the intent to flip it in a couple of years but we always consider one or two exit strategies that would allow us to sell them and to look at new investment opportunities. We are also looking for long term ownership and prefer to take the steady income those companies provide. Each deal in anylise on a case by case basis.
Our Process
Our purchase process is designed to acquire businesses in the most time-efficient manner. Once we receive information on a business, we quickly determine our level of interest and inform the business owner as soon as possible. We may ask for additional information before scheduling a formal conference call or a visit to the company. If we continue to think it is in the interest of both parties to proceed, we present a simple letter of intent (LOI), which will tell the basic points of the deal. Upon acceptance of the letter of intent our legal team will draft a contract. Our due diligence is completed as quickly as possible and we can close as soon as the acquisition agreement is satisfactory to both parties.
Please note that throughout the whole process we work to keep everything fully confidential.
Our Main Criteria
Operating Profits above $4,000,000.
Good history of annual profits
Low debt on balance sheet.
Real Estate, distributors, retailers, and manufacturers preferred.
No businesses which are highly cyclical.
Most of management team staying on after the sale.
* JV structure is also possible on certain projects.
Please contact us if you would like to discuss concerning an investment opportunity that you have to offer or if you need funding or need an Equity Partner for a specific project.
Banking
Inspection & product testing
Logistic & transportation
