deals
AGCO securitization - designed for growth
Fast work delivery in China
noto bene
What's NewS Issue 2 March 2000 I 3
As reported in a What's NewS Flash
several weeks ago, RI has successfully
structured and underwritten a milcstone
deal in the US: the USD 250 million assct
backed securitization facility for AGCO,
an important Rabobank cliënt and strate
gie business partner. The Duluth, Georgia-
based US firm is one of the world's lead-
ing designers, manufacturers, and
distributors of agricultural equipment,
with yearly sales of USD 2.9 billion. It
markets a full line of agricultural
machines including tractors, combines,
hay tools and farm implements, all of
which are sold through a far-reaching
international network of dealers and dis
tributors under the brand names Massey
Fcrguson, Allis, Deutz Allis, and others.
What's more, the AGCO group provides
retail credit for equipment purchasers
through the Agricredit joint venture with
Rabobank. The Rabo-structured securiti
zation delivers to our cliënt a lower cost
of borrowing and a one-time acceleration
of cash flow (with a corresponding reduc-
tion in outstanding debt). On the markets,
it also provides a clear demonstration of
RI's credit structuring and execution capa-
bilities. 'Rabobank has done a great job
of coming through and making the deal
very smooth; as always, the bank is
consistently easy to work with and it
ranks among our most valued business
partners,' remarked
Patrick Shannon,
AGCO's Vice President
and Chief Financial
Officer. The purchase of
AGCO's receivables was
financed by issuing
asset-backed commercial
paper. This paper was
marketed as the
inaugural transaction of
Nieuw Amsterdam
Receivables Corporation (New
Amsterdam), a new USD 5 billion
multiseller program designed for RI
clients and prospects. A Delaware-based
special purpose company, New
Amsterdam was set up to augment our
assct securitization capabilities.
The first, AGCO-related tranche of
commercial paper received solid ratings of
A-l/P-l/Fl from S&P, Moody's and Fitch
IBCA respectively. The creation of New
Amsterdam gives Rabobank relationship
managers a powerful, low-solvency,
capital markets-based tooi to compete for
fresh cliënt business. According to
Shcldon Sussman, global co-head of credit
structuring bascd in New
York, 'the creation of New
Amsterdam and the inau
gural AGCO transaction
were the results of an inten
sive collaborative effort in-
volving a host of
Rabobankers in New York,
London, and Utrecht over
the past six months.' The
principal architects of this
transaction include corporate bankers
Adriaan Weststrate and Betty Mills in
Atlanta, and the structuring team in New
York consisting of Eraj Asadi, Wing Ng
and Gary Gal. In addition, we would like
to acknowledge the guidance and support
of members of New York Credit and Mid-
dle Offices, whose efforts were instrumen-
tal in the establishment of this program.
m
Recent weeks have seen a spate of
high-profile, big dollar deals and
What's NewS can report that more will
be announced shortly. But amid all of
the justifiable pride that these
transactions generate, it is important to
remember the large number of
bread-and-butter transactions regularly
generated by Rabobankers throughout
our global network - deals that might
be small but are equally fine. The focus
this month is on China, where our
Beijing office recently concluded two
transactions that, while modest in dollar
terms, advance our ongoing relationship
management ambitions and demonstrate
our ongoing ability to mobilize expertise
in the pursuit of delivering cliënt value.
The first deal was a USD 3 million
credit in favor of a Chinese local bank
to find the local currency working
capital needs of Friesland Tianjin (in
exchange for which the cliënt deposited
a collateral pledge for the santé sum at
our Hong Kong branch). While the deal
was admittedly a simple one, it was
delivered with impressive speed. The
cliënt approached Rabo in November,
but specified that the funds had to be
disbursed before cnd-Dccember 1999.
Normally, this would have been
impossible - 'even the cliënt thought it
was unlikely given the bureaucratie red
tape involved' says Lai Chong Tuck of
Shanghai - but an intense collaborative
effort between China and Utrecht
ensured the clicnt's needs could be met.
This fast response time 'opened the
door to other business possibilities such
as M&A in the near term.' Secondly, we
acted as arranger and participated to a
value of USD 16.5 million in a USD
200 million commercial paper program
for SINOCHEM (China National
Chemicals Import Export Company).
'Our participation contributed to the
If you would like to know more
about the complex deal put
together for Eurofresh in the US
and reported by us last month,
you can contact Richard Cerf of our
San Francisco offier for details.
final success and closing of the
commercial paper program and was
very niuch appreciated by senior
management. This effort, coupled with
regular senior-level management
contacts, has strengthened our
relationship with this important
agribusiness group and brought forth
further spin-off opportunities.' For
example, Rabobank has since been
approached to finance SINOCHEM's
lucrative fertilizer trade business, where
imports alone are valued at some
USD 3 billion annually, and potentially
to structure certain of the clicnt's barter
trade activities in the South East Asian
market. Both deals further heighten our
profile on this fast-growing market.