The Italian
PARTNERSHIP
international
Working closely with sister organization De Lage Lan
den, Rabobank Milan Branch has mediated a major fac-
toring deal for the Italian textile company, Olcese.This
is one of the largest contracts ever signed by DLL and
will involve all of the factor's international sub-
sidiaries. But equally important for DLL is the fact that
it proves just how partnership between the bank and
the factor can generate creative solutions for clients.
Milan's Paolo Oldani - the Olcese deal has been a real learning
experience.
'As soon as we began looking at this par-
ticular company, we realized we would need
De Lage Landen's input in this deal,' says
Paolo Oldani, the credit analyst who work-
ed closely on the contract with his Milan-
branch colleague Roland van Limburg
Stirum and Gerrit Schipper of DLL's Turin
office. 'It's so useful to have this kind of ex
pertise within the organization because it
means you can put together creative pack-
ages that bring in more than traditional
products.'
The Olcese story is, in fact, almost a text-
book example of how partnership can
work within the organization. The initial
introduction to the company had actually
come from Rabobank in New York. 'We
got a call from them in April asking if we
would be interested in a restructuring deal
for a large Italian textile firm,' he explains.
'They had been approached by the US mer-
chant bank Donaldson, Lufkin and Jen-
rette (DLJ), but couldn't come in because
no American company was involved. We
had worked with New York branch before
on a similar restructuring package for
another company. But that deal didn't
materialize. So they thought we might be
interested.'
As soon as the Milan branch began examin-
ing the company's requirements, they came
up with the concept of a working-capital
financing deal on a factoring basis. 'The ar-
ranger was actually pushing for both the
factoring facility and a five-year commit-
ment on financing,' Oldani says. 'But from
the start we preferred bringing in DLL.'
Established in 1904, Olcese is a well-known
and very reputable Italian firm which manu-
factures premium and melange cotton yarns
for fabrics used by top designers such as Ar-
mani, Christian Dior and Calvin Klein. Last
year, the company exported 40 percent of
its production, but expects this figure to in-
crease to 60 percent by 1998. Turnover in
1994 was ITL 251 billion.
'It's actually a great company,' says Oldani.
'The management is sound and they seem to
be doing everything right in what can only
be described as a very tough market in
Europe. Both Henk Visser and DLL's Ton
Toebosch met with Olcese's management
and when the deal was finalized, Ton Toe
bosch was shown around one of the
The bank's full board of directors will be in
Latin America from 12-27 January, 1996, visit-
ing our operations in Argentina, Chile,
Cura^ao and Brazil.The visit ties in neatly with
the recent announcement that Raibo do
Brasil has been granted special presidential
permission to open a subsidiary.The
announcement is particularly gratifying for
the bank as the Brazilian constitution has
prohibited the establishment of new foreign
banks in the country. More in the December
issue.
company's seven very modern plants. I'd say
they were impressed with what they saw.
And I think Olcese was impressed with us.'
The problem confronting the company was
that its struggling parent had been using it
to raise capital. 'As a result, in 1993, Olcese
had extraordinary losses of some ITL 93
billion, which was higher than its net worth.
So, according to Italian law, it had to be re-
structured through a capital injection which
DLJ had been asked to arrange. Besides ap-
proaching UK institutional investors for
capital reinforcement, DLJ were pushing for
a medium-term commitment from us along
with a factoring deal.'
Olcese's numbers impressed the Credit
Committee enough to gain approval for a
total financing package of ITL 90 billion -
half on a five-year commitment, and the
other half in a factoring deal. 'In the end,'
says Oldani, 'Olcese itself found a potential
equity investor and is out of trouble for the
present. But we think there is a good chance
that they will come hack to us for the restruc
turing of their banking indebtedness. So, we
now have a situation where we will be work
ing with the company through DLL in a way
we thought was best anyway. And DLL will
be funding the deal through our office.'
Besides its work with Milan, DLL has had
contacts with both the Sydney and New
York offices on receivables financing pro
grams. 'But these are still contacts,' says
DLL's Schipper. 'The great thing about this
particular partnership with the Milan
branch is that it shows clearly that factoring
can be a real strategie instrument both for
cliënt and the bank. Eactors tend to have a
bit of an image problem. But I think that
once people realize just how useful our
products can be when structuring finance,
that image will change very quickly. We're
really very, very pleased with this contract -
hopefully, it will be the first of many
between Rabobank offices around the
world and DLL's European network.'
M ITALIA
Wtm Rabobank Milaan heeft voor De
Lage Landen (DLL) één van de grootste
factoring-contracten ooit weten binnen te
halen. Het gaat om een ITL 45 miljard (NLG
45 miljoen) deal voor de Italiaanse textiel-
groep Olcese die topgarens produceert
voor ontwerpers als Armani, Christian
Dior en Calvin Klein. Maar het belangrijkste
van deze samenwerking is, dat het bewijst
hoe nuttig factoringprodukten kunnen
zijn bij het structureren van financiële dien
sten.