Global Trade Receivables Securitization DACT Treasury Fair November 11, 2011 Steven Claassens, Bunge...
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Transcript of Global Trade Receivables Securitization DACT Treasury Fair November 11, 2011 Steven Claassens, Bunge...
Global Trade Receivables Securitization
DACT Treasury Fair November 11, 2011
Steven Claassens, Bunge Corporate Treasury
Introduction Bunge
2
2010
2009
2008
2007
2005
2002
2001
1999
1998
1997
70s & 80s
1967
1945
1938
1918
1905
1884
1859
1818
Starts business in North America
Relocates to Antwerp to trade commodities
J.P.G. Bunge founds Bunge & Co. in Amsterdam
Establishes operations in Argentina to trade grain Makes first export of
soybeans from Brazil
Enters Brazilian fertilizer market with purchase of Serrana
Expands into Brazil and enters the wheat milling business
Diversifies along the food production chain
In Brazil, purchases soy processor Ceval and begins acquisition of new fertilizer brands
Builds largest U.S. soybean crushing and refining plant
Moves headquarters to U.S. and creates international marketing unit
Goes public on NYSE and becomes Argentina’s leading agribusiness company
Purchases Cereol to become the world’s largest soy processor
Opens first soybean processing plant in China
Purchases Santa Juliana sugarcane mill in Brazil
Builds first soy processing plant in U.S.
Begins building an export terminal in the U.S. Pacific Northwest and a crushing plant in Vietnam
In Brazil, sells fertilizer nutrients business and adds five new sugarcane mills with Moema purchase
Purchases edible oils company Walter Rau in Germany
… With a 192-Year History
3
A Leading Global Agribusiness & Food Company
Revenue 2010: $46 bn
Market Capitalization: ~ $ 10 bn
Rating: Baa2/BBB-/BBB
Employees: ~32,000
Facilities: ~400
Countries of Operations: 30+
Key Facts
Agribusiness Sugar & Bioenergy Food & Ingredients
35%
35%
7%
17%
6%Agribusiness
Sugar & Bioenergy
Food & Ingredients
Fertilizer
Other
Fertilizer
Long-Lived Assets ~ $ 7 bn
4
Global Presence
5
Overview Global Trade Receivables Securitization
6
Objectives
• Alternative source of capital
• Funding at favorable rates
• Global & scalable program
• Enhanced operational efficiency
7
Alternative source of capital at favorable rates
• 5-year program, backed with 364-day liquidity facility
• Primary funding via bank-owned Commercial Paper Conduits
• Good momentum as conduits are eager to invest in trade receivables:
- Low-risk asset class
- Matching maturity with commercial paper (up to 60 days)
• Reciprocity: syndication with 4 core relationship banks
• All-in cost of fund 1M Libor ~ 115 bps (mainly depending CP Cost of Fund)
• No financial covenants, only wind down events
8
Global & scalable program
• Economies of scale resulting in higher funding capacity:
Minimize excess country and obligor concentrations
• Scalability of the program:
Add jurisdictions and currencies
• Scalability of facility amount:
Absorb higher volume (organic growth, higher prices, acquisitions)
• In recent years, more countries have developed legal and regulatory framework to allow cross border securitization, however increasingly tax is used to narrow budget deficit gaps
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Enhanced operational efficiency
• Replacement of three local securitizations and five factoring facilities in North America and Europe
• Centralized set-up, management and administration by Treasury
• Data-gathering, reporting and analysis outsourced to well-known service provider (Finacity)
• Cashless settlement via in-house bank
• One-off audit opinion for US GAAP off balance sheet treatment
10
Notable highlights
• Structure:
- US (5 originators), Canada, Spain, Portugal, Italy, Germany, Hungary
- Multi-currency facility: USD, CAD, EUR, HUF
- 26 eligible obligor jurisdictions
• Effective liquidity management by daily re-investment of collections
• Collections remain on Bunge’s bank accounts
• Trade receivable portfolio structured on an implied AA-rating
• Funding base can be affected by sales volumes, commodity prices, FX-volatility and country & obligor ratings
• Advance rate 85%-88% (aim was 80% or higher)
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Structure & Implementation
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Structure
Lead arranger: RabobankPurchasers: Rabobank, Credit Agricole, HSBC, BNP Paribas
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Cash *
Committed
Purchaser
Conduit Purchaser
SPV
CashDPP100% Sale of Receivables
Servicing
Fees
Committed
Purchaser
Conduit Purchaser
BenefitCash & DPP
Committed
Purchaser
Conduit Purchaser
True sale of receivables
Cash *Cash*
Master ServicerSubordinated
Lender
Administrative Agent
Principal + interest
Subordinated Loan (~ DPP + excess concentration)
Funding (if no CP issued)
DPP =Deferred Purchase Price (~ first loss reserve)
OriginatorsOriginators
IntermediatePurchaser
* Face value -/- discount
True sale of receivables
Monumental Coordination
Bunge
Treasury
Rabobank
London/NY
11 Bunge Originators in 7 Jurisdictions
Internal & External Legal Counsels
IT resources
Numerous Collection Account Banks in all Jurisdictions
Finacity
Internal & External Tax
Finacity
Internal Legal Counsel(US and Europe)
Syndicate Banks
Internal Credit/Tax/Various
Internal Accounting & Control
Auditors
Transaction Counsel
Collateral Audit Firm
Rating Agencies
14
Key considerations
• In-depth analysis (receivables portfolio, contracts, A/R & credit management, IT-systems, bank accounts)
• Communication & commitment:
- Dedicated project team (very different from RCF, bi-laterals etc.)
- Reasonable timelines and clear requirements for operating companies
• Structuring & Syndication:
- Selection of lead arranger
- Deal structuring with lead arranger only (use Top Tier law firms)
- Custom-made (structure to specific company needs / features)
• Early blue-print of Day-to-Day management: outsourcing, IT-support, data gathering, reporting / analysis, settlements 15
Next Steps – new countries to be added
16
Questions
17