CASE STUDY

EXECUTIVE SUMMARY

In 2007, a major global technology solutions provider announced

its intent to spin off its non-energy businesses in order to become

a pure play oil and gas equipment and services energy company. To

ensure a smooth transition, the company called on the same team

of specialists from Bank of America Merrill Lynch Global Treasury

Services that had facilitated the implementation of the company’s

automated global management system in 2000.

The challenge was twofold: to put in place a new bank structure

for the new corporation that would involve minimal disruption to

the company’s IT system and to consolidate two standalone (cash

management and FX) systems into a single platform for treasury

management.

Both missions were accomplished on aggressive timelines

and with resource-constrained staff at company headquarters

and at the offices of the new corporation. Thanks to extensive

planning and a new, more proactive approach to facilitating global

cash management, both organizations are enjoying streamlined

management of cash management and FX activities.

TAblE of ConTEnTS

A new corporate entity . . . . .2

Streamlining the solution . . .2

New treasury operations . . 3

Setting Up Treasury for a new Company

SEPTEMBER 2012

Global Technology Solutions Provider

SETTING UP TREASURY FOR A NEW COMPANY 2

A nEW CoRPoRATE EnTITY

In 2007, a leading global provider of technology solutions for the energy industry and industrial markets announced its intention to divest its non-energy businesses in order to function as a pure play oil and gas equipment and services energy company. After evaluating several options — from an IPO to private equity investment — the company decided to undertake a tax-free spinoff of the business unit.

The new legal entity would combine two of the company’s businesses serving the food processing and air transportation industries into an independent, publicly traded corporation.

“The company made the decision to spin off its ‘machinery business unit’ in order to become a pure play energy company,” says Lee McKinstrey, managing director, Corporate Banking at Bank of America Merrill Lynch. “They approached us in early 2007, when they were beginning to lay the groundwork for the two new legal entities.”

In dividing the company into two distinct entities, the existing treasury structure was split in two, creating the need to duplicate the company’s bank platform for the new corporation. “The new corporation would need to leverage the multicurrency pool that we had established at the company’s London branch in 2000 for its European and outside-U.S. operations,” says McKinstrey. “Thankfully, they had the confidence in us to accomplish that.”

The Bank of America Merrill Lynch team duplicated that same arrangement for the new corporation and set up a structure to make it as easy as possible to dismantle once the spinoff was complete. They worked with the company’s treasury executives to outline the requirements for a physical bank structure for the new corporation that was basically a mirror of what already was in place.

Over the course of the following year, the process of opening new accounts and getting documentation in place, as well as the tax ruling that was needed to allow tax-free distribution, were completed. Although the company and the new corporation were operating as two separate entities, the same treasury team managed cash and bank activities for both organizations.

STREAMlInInG THE SolUTIon

One of the company’s top priorities was to make the transition as simple and streamlined as possible. With resource-limited staff at the company headquarters and offices of the new corporation, the new cash management solution needed to be simple to manage and easy to integrate into the corporate IT platform when the new organization was spun out. “Our clients wanted it be as clean as possible and to create the least possible disruption,” says McKinstrey.

“ The new corporation would

need to leverage the

multicurrency pool that we had

established at the company’s

London branch in 2000 for

its European and outside-U.S.

operations. Thankfully, they

had the confidence in us to

accomplish that.”

Lee McKinstrey Managing Director Corporate Banking Bank of America Merrill Lynch

“ Bank of America Merrill Lynch” is the marketing name for the global banking and global markets businesses of Bank of America Corporation. Lending, derivatives, and other commercial banking activities are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., member FDIC. Securities, strategic advisory, and other investment banking activities are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and members of FINRA and SIPC, and, in other jurisdictions, by locally registered entities. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed. ©2012 Bank of America Corporation

SETTING UP TREASURY FOR A NEW COMPANY 3

Documentation challenges were daunting. The company had more than 150 accounts around the world, each with its own signatory. One of the major challenges that the company’s treasury team faced early in the process was the need to track down signatories at locations throughout Europe. Working with the Bank of America Merrill Lynch team, the company was able to help designate key members of the treasury team to sign for treasury activity.

nEW TREASURY oPERATIonS

In order to manage its complex treasury management functions, the company made the decision to consolidate its cash management and international payments systems into a single platform — with a focus on ease of integration and flexibility. Company decision makers chose SAP Treasury because of its ability to integrate with the company’s ERP system.

With the complexity of its global operations, the company needed to customize a system, a process that was accomplished in phases. The first step was replacing its cash management system with the SAP cash management module; secondly, it replaced its FX system with an SAP FX module; finally, it implemented investments with SAP In-House Cash.

Working with the company’s cash management staff and SAP consultants, Bank of America Merrill Lynch Global Treasury Solutions specialists were able to implement and set up bank files. “We set up delivery times and formats for files, tested bank files to make sure that everything was coming across as expected — and moved to testing to make sure the system was pulling in as expected,” says Carrie Moore, managing director in the Energy & Power group at Bank of America Merrill Lynch. “In January 2010, we were finalizing file formats to work out the kinks and set a go-live date.”

For the better part of 2010, the FX module that handles FX reporting, identification and exposure was designed, tested and implemented. The module now interfaces with the company’s hedge confirmation system and direct trading platform on Bloomberg, so there is straight-through processing from identification of the exposure to the confirmation to the trade.

The international account structure and treasury systems are now providing the new corporation with a streamlined solution for meeting its global cash objectives. The newcorporation’s cash management with other banks is streamlined. “According to our contacts at the companies, the system works flawlessly,” says Moore.