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

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blad 'What's news' (EN) | 1997 | | pagina 11