gPEAL OF THE MONTH
Papering-up
WHAT'S NewS Issue 9 October 1997
info exchange
Christine Haguais
Hervé Bernaille
Diederik Conijn
The cliënt: COBAMAR
banana-growers' cooperative,
Martinique
The deal: prefinance of EU
subsidiaries and guarantees
The players: Christine Haguais
and Hervé Bernaille and
Olivier Morand-Duval,
RI Paris branch; Lionel
^lontocchio and Marie-Laure
^uffal, Crédit Lyonnais;
Diederik Conijn, RI Brussels
branch; FAR Utrecht.
If you have difficulty putting
EU subsidy together with
Caribbean Martinique, then
the fact that this sun-soaked,
and therefore ideal banana-
growing, island is a
'department' of France may
help clarify the situation. So
much for the Martinique part.
The EU subsidy part is
explained by the availability of
funds from the European
Union to finance some
agricultural products.
According to Haguais and
bernaille, 'Farmers and
"rowers are entitled to benefit
from EU subsidies on some
products. The problem is that
there is often a significant time
lag between requesting and
receiving payment.'
In addition, while Brussels is
monitoring the transaction and
determining the subsidy, there
is no definite receivable on the
EU, although if all of the
documentation is correct, then
the level of debt is known.
'This is where the Paris team
and colleagues from Crédit
Lyonnais found a niche. If the
debt was certain, no deal
would be possible, because the
farmer could easily discount it
with a very low margin
because the EU is a sovereign
risk. Conversely, if the amount
of debt is undefended, there
could also be no deal - even if
the farmer's request was
honoured - because legislation
would prohibit the bank from
any recourse. 'This opened up
an avenue for us,' say Haguais
and Bernaille. 'Crédit Lyonnais
was interested in working with
a triple-A bank with
undisputed skills in risk
analysis, especially in FöcA.
This prefinance of subsidies is
what we came up with. The
key issue here is to use the
French Loi Dailly through
which we can discount the so-
called "germinating debt".'
This new structure offers a
win-win solution to all
concerned. Prefinance is
limited to advances on
subsidies, not the subsidies
themselves. In addition, any
fluctuation in market price is
countered by finance of a 70-
percent maximum of the
calculation coming from the
previous year prices. 'If we
sum up why this structure
could be interesting for other
offices, then we'd say that: a) it
produces high added value for
F8cA clients and prospects; b)
the risk is minimal and relates
to fraud or inaccuracies rather
than corporate risk; c) the
related Cooke ratio is
extremely low; d) the potential
market is huge and should
increase over the coming years;
e) we are already starting to
think about further
development for other
agricultural produce and
Atlanta has closed a USD200 million securitization deal with franchise
financiers CNL. Funds are to be raised through the US commercial paper
market, Magenta Capital Corporation. According to Atlanta'sTom Dawe,
'we are on track to grow from the initial amount, in fact we have just
been granted an approval to increase to USD300 million. Ultimately we
would like to bring in other parties and raise this to USD500 million.' In
true networking spirit, the transaction originated through London's
Brian James who approached Grand Metropolitan (owners of Burger
King, a.o.), while Rabo Capital Services provides interest rate swaps and
New York Syndications is involved in finding outside participants.
From left to right: Tom Dawe -Rabobank Atlanta-, Curtis
McWilliams -President Restaurant Group CNL Financial Services,
James Seneff -Founder CNL Group Ine, Ed Mc.Dougall -Executive
Vice President Restaurant Group CNL Financial Services and Brian
James -Rabobank London.
yOAA. kd^OAAJ*)
Rabobank Australia has
entered the final phase of
discussions in forming a
strategie alliance with
Wrightson Ltd, New Zealand's
only national rural service
company. According to Cor
Broekhuyse'the transaction
gives us the opportunity to
develop our New Zealand rural
lending activities significantly,
while also creating an
unchallenged distribution
network.' For Wrightson's the
move is consistent with their
gateway strategy; providing
customers with broader access
to world-class products and
services.The alliance will create
the co-brand Rabo-Wrightson
Finance.
maybe for a securitization of
receivables, ie. EU subsidies.'
Clearly, there is a lot more to
the actual structure than is
outlined here - the Paris team
is more than willing to explain
the finer points and all
implications. Please do not
hesitate to contact either
Christine or Hervé on
telephone: +33 1 447 18200,
telefax: +33 1 447 10060.
looking ahead /-
October
6-10 Client relationship
managers meeting,
Utrecht
7-8 Fruit juice conference,
Amsterdam
9-10 IPC Agro forum,The
Flague
November
11-14 General managers
meeting, Utrecht
18-21 VIV Europe, Utrecht
December
8 Forecast 1998, Utrecht
Studies
November
Market study Beef/Veal
Market study
Grains/Rice
Market study Food
Retail
