s
fleal of the month
deals
Cooperative
grocers
Milking the market
P
What'sNewS Issue5-May 1998 II
Onboard the vessel loading rice, Lai Chong
Tuck (middle) with Singaporean broker Oh
(left) and Hung from ASC (right)
fallen through, which thus left the
confirmation line unused. At the request
of our Vietnam rep office, this
confirmation line was allotted to the
Vietnam transaction instead, a decision
that was facilitated by the fact that all
L/C's were already at hand.
ince Rabobank Duta is a local
Indonesian entity, the confirmation risk
only covers the credit risk of Bank Rakyat
(i.e. not the Indonesian country risk as a
whole). As the Vietnamese would not
accept the country risk themselves, the
challenge was to devise a structure that
would allow them to retrieve both cargo
and documents in the event of an
Indonesian payments moratorium, while
at the same time allow ourselves full
protection by way of controlling the cargo
in the unlikely event of default by the
state-owned Bank Rakyat. The eventual
structure met all objectives, giving the
Vietnamese parties sufficiënt peace of
mind to proceed. Another case where
internal networking and our deep-seated
knowledge of the commodities financing
market were the keys to success.
Certified Grocers, a cooperative owned by its member-
patrons, is the leading grocery Wholesale group in
California. It serves its owners - independent
supermarket chains comprising a total of 2,780 retail
stores - and has annual revenue totalling roughly
USD 2 billion. Rabobank has been chosen to agent and
fully underwrite a USD 100 million unsecured 5-year
revolving line of credit for Certified Grocers.
I n February, Certified decided to replace
its existing revolving credit facility
together with its agent, Bankers Trust
Commercial. It also decided to consider
alternative proposals from four competing
institutions, including ourselves. (The
company's previous secured facility had
inflexible covenants and was priced above
market rates.) Within two weeks of dis-
cussing the financing with Certified
Grocers' senior management, our team
was able to obtain full credit approval and
have a commitment to issue a competitive
structure that fully met the client's needs.
'The Certified management team told us
they were impressed by Rabo's under-
standing of cooperative structures, our
quick response time, as well as the struc
ture and flexibility of our proposal,'
Bradford Scott explains. The deal team
included Bradford Scott (relationship man
ager), Dagmar Venus (credit analyst), Lizz
Hund, (San Francisco LPO manager), plus
Ron Klein (syndications) and Bob Bucklin
(providing senior management support).
Our London M&k team, together with support from the international M&A team, recently helped condude a sale
of Woodgate Farms Dairy to Northern Foods, fetching a price substantially above net asset value. This paved the
way for a restructuring of the industry in its region and led to the listing of a new player on the UK dairy scene.
The dient Intex Agri Commodities Pty. Ltd.,
Singapore and An Phu Services Corp, Vietnam
The deal A structured trade finance transaction
valued at USD 26.5 million
The players Lai Chong Tuck, Wong Lai Ha
(Vietnam rep office), Gillian Hey, Shirley Ho, Yeo
Woei Koen (Singapore branch), Jan Remie (trade
finance, the Netherlands), Lucy Pandjaitan
(Rabobank Duta, Indonesia)
T he turbulence that has recently hit
Indonesian markets has called for some
creative thinking and fast footwork to
keep the wheels of trade spinning ahead.
In late February, our rep office in Ho Chi
Minh City received an urgent message
from Eximbank, a valued Vietnamese
cliënt, requesting its opinion regarding the
^^isk associated with a deal in financially-
troubled Indonesia. Eximbank wanted to
mitigate such risk for its customer, Anphu
Services Corporation (ASC), which had a
contract to ship 85,000 metric tonnes of
rice to Indonesia between March and June
of this year in a deal valued at over USD
26 million. Since both ASC and
Eximbank are valued customers, our rep
office went into overdrive to help.
An application was sent to our Utrecht-
based trade finance division for a letter of
credit (L/C) confirmation for Bank
Rakyat, the Indonesian importer's bank:
Eximbank was itself unwilling to enter
into further Indonesian-related risks. It
emerged that Rabobank Duta had been
allocated USD 30 million for Bank
^JCakyat risk associated with a separate but
(pimilar transaction in Hong Kong. A
flurry of phone calls and e-mails revealed
that the Hong Kong transaction had
I eople in the UK like to consume their
milk fresh, unlike the Europeans who
favour the heat treated variety. This
means that dairies tend to be smaller and
are often located closer to consumers'
homes, a production pattern that
Botentially involves inefficiencies of scale.
Woodgate Farms Dairy, a company that
delivered milk to such homes, found itself
in difficulties in the late 1980s and was
obliged to call in new senior management
to reverse the decline. The key to its
successful profit turnaround was a
strategy of focusing sales to the major UK
supermarket chains such as Tesco, a
leading supermarket chain and top-selling
milk retailer.
Today, the company, which produces
about 160 million liters of fresh milk
annually (with GBP 70 million sales), has
a significant share of the market in
London and England's Southeast, one of
Europe's most densely populated areas.
The owners feit the time was ripe for sale.
Through an introduction from
relationship management, London's
M&A desk was approached to engineer a
transaction that would insure Woodgate's
continued survival in LJK's Southeast. The
company was acquired by Northern
Foods via a controlled auction, and then
spun off and publicly listed as part of the
larger Express Dairies division on the
London Stock Exchange. 'We handled
every aspect of this deal on behalf of
Woodgate,' says David Craig. 'Not only
were we able to get a premium price for
the shareholders, but we also helped
ensure the continuity and development of
Woodgate's production facilities, which
are now operating under the Express
umbrella and will continue as a feature in
the rural production community.'
