Triple-crown in New York
io What'sNewS Issue 1 January/February 2001
Year-end 2000 was a busy time for Rl
New York with three major deals dosed
in quick succession - two of them with
the same company.
CNH - success into the future
Combines for Uzbekistan
Philips Medical gets the cutting edge
Opening proceedings, the New York
securitization group saw out the old
year by providing a Letter of Credit facili-
tating a new strategie CAN 125 million
securitization for agricultural equipment
giant Case New Holland (CNH). The
structured trade finance group then saw in
the new, with a USD 40 million export fa-
cility, again for Case New Holland, and a
USD 50 million export finance syndica-
tion for Philips Medical.
Securitization's Letter of Credit (LC) pro-
vides 9% second loss protection for the se
curitization of CNH's Canadian dealer
floorplan receivables. Point person on the
transaction, Gary Gal
notes that, 'even though
CNH is a sophisticated se-
curitizer of both its whole-
sale and retail assets, this
transaction marks the first
Canadian dealer floorplan
receivables transaction for
the company.' The team's
experience in securitizing agricultural
dealer floor plan receivables was a key
factor in their being awarded the appoint-
ment.
This securitization facility provides CNH
with off-balance sheet financing prior to
year-end 2000, as well as an ongoing
lower cost of borrowing and one-time ac-
celeration of cash flow. The transaction
was funded through Apex Trust, a Cana
dian multi-seller asset-backed commercial
paper conduit sponsored by BMO Nesbitt
Burns. Apex issues commercial paper
rated R-l (high) by Dominion Bond Rat
ing Service, which is comparable to an A-
1+ rating by Standard &c Poor's.
The largest manufacturer of agricultural
equipment in the world, CNH is also the
third largest manufacturer of construction
equipment and operates one of the world's
largest equipment finance companics.
Formed through the merger of Case and
New Holland in 1999, the Racine-based
concern now distributes its globally recog-
nized brands of equipment in over 160
world markets through an extensive net-
work of approximately 10,000 dealers
and distributors.
In conjunction with closing the transac
tion, RI met with the new treasurer of
CNH Global, to indicate its intent to link
the provision of this LC with additional
new business opportunities front CNH. In
a wide-ranging discussion, the possibility
of securitizing agricultural equipment in-
ventory lines in the US, Europe and Aus-
tralia - markets in which CNH has a large
presence - was raised. 'We expect a securi
tization opportunity for RI's Nieuw Ams
terdam and/or Erasmus conduit program
at some point in 2001,' says Eraj Hasadi,
head of NY's syndication group.
Alongside securitization's Hasadi, Gal,
and Wing Ng who strucutured and exe-
cuted the transaction, the principal archi-
tects of this trans
action included
corporate
bankers Govert
Verstralen and
Elias Stavrou of
RI Canada who
originated the
business, and RI
Chicago's agricultural expert, who pro-
vided valuable technical advice. The team
would also like to acknowledge the guid-
ance and support of members of New
York's credit, legal tax and middle of
fices, whose efforts were instrumental in
establishing the program.
While securitization were taking care of
CNH's Canadian dealer floorplan receiv
ables, the NY structured trade finance
group (STF) was closing a multi-tranche
export facility to finance the export of 200
CNH combine harvesters to Uzbekistan.
With the combines destined for the gov-
ernment's agricultural development
agency, the National Bank of Uzbekistan
(NBU) acted as borrower and stipulated
that any financing proposal cover 100%
cm
of the USD 40 million CNH contract
value.
STF was able to meet this requirement at
a competitive all-in cost that beat out
other export finance heavyweights such as
Chase, SG and ABN Amro by drawing on
its expertise in US Ex-Im Bank programs
and the private political risk insurance
market. Putting together a US Ex-Im Bank
guaranteed loan for 85% and an AIG-in-
sured loan for the balance it successfully
concluded one of the largest non-aviation,
export transactions supported by the US
Ex-Im bank in 2000. Its cause was also
helped by the enthusiastic support of
CNH itself - a legacy of STF's previous
collaborations with the agricultural equip
ment giant, particularly in financing ex-
ports to Russia. NY corporate banking's
excellent relationship with CNH was also
an important factor. The deal will have a
significant impact on STF's bottom line -
bringing over USD 300,000 in first-year
income producing a gross ROS of over
40% p.a. In 2001, STF hopes to repeat its
success by winning the mandate to finance
a follow-on CNH contract for 400 trac
tors, or approximately USD 45 million.
The RI transaction team included: front
New York, STF's Ling Tsou, Stuart Bar-
rowcliff, Peter Hall, and Zenaida Castro;
international trade services' Violeta Cruz,
Sergio Mendoz, and Jacques Duroseau;
corporate banking Chicago's Tom Lev-
asseur, and front STF Utrecht, Martin
Sterkman and Guus Rozendaal.
Many of the STF teant were also involved
in closing a USD 50 million export finance
syndication for Philips Medical Systems
during the same rollover period. Acting as
agent/arrangers, Rl participated together
with Wells Fargo HSBC Trade Bank and
US Bank in a syndicated purchase of
Philips Medical's medium term export re
ceivables. The facility allows Philips to of
fer medium-term financing to its cus-
tomers worldwide, giving it a vital
competitive edge in emerging markets. In
addition to helping the contpany boost ex
port sales, the transaction's structure will
allow the company - a fully>-
