The bank's Energy Team
understands the business,
and they know when
to beflexible and they
understand the
and its changes
COVER STORY
Gerard van Rijt,
treasurer ofoil company Vitol:
Impact
It's early December 2008 and, as crude oil prices fall to $43
per barrel from a peak of $147 in July, companies involved in
the commodities market are looking ahead and wondering
what sort of surprises the new year holds. The past year has
seen many firms forced to re-negotiate funding requirements,
ask for credit line extensions and cut back on spending, as
ever-important banking relationships take on even greater
significance.
According to Phil Streten, a General Manager at Rabobank
Australia, the current difficulties in the credit markets have
affected Rabobank's cliënt base in both Australia and New
Zealand. "Effectively all of our clients have had to face difficult
choices around the maintenance of financial headroom and
the increased demands the market is exerting on them in
terms of structure and the price they're forced to pay for
capital. Additionally, the disappearance of many banks -
some of which are household names - has really jolted
companies into renewed levels of engagement with their
core bankers."
One of Rabobank Australia's long-term clients is Nufarm,
an international player in the erop protection industry,
headquartered in Australia. Since the crisis began, says
Streten, there has been a lot of high-level contact between
the two organisations.
"'Nufarm has a very professional and long serving management
team across all aspects of their operations, including the
finance team led by Kevin Martin. While the company has
always maintained a very tactile relationship with Rabobank,
it's fair to say we've had more to say to each other this past year
than in previous years. As a company with global operations,
it faces a higher level of complexity around its capital decisions
and banking arrangements than some of our other clients."
Since the credit crisis began, Rabobank has undertaken
a number of new banking services for Nufarm, including
providing facilities for Nufarm Italy and the company's wholly
owned subsidiary in Brazil. Domestically, additional facilities
and longer maturities have also been agreed.
"We've had a very successful working relationship with
Rabobank for around ten years," Kevin Martin, Nufarm's
Chief Financial Officer says. "Rabobank is a global provider
of finance to the group, as well as being a key partner
in understanding the agronomic business globally. Our
relationship has developed strongly - it has gone from being
an Australia-only relationship to one that now covers Europe
and North and South America. Rabobank's greatest strength
is their true understanding of the cycles that occur within
agriculture. They manage to see beyond the short-term
issues that tend to cause players that aren't as conversant in
agricultural issues to worry. This is geared especially towards
understanding seasonality and climatic conditions, and
Rabobank understands how things can change both during
and between seasons. They are truly unique as a global
organisation, which has had clear benefits over the past
18 months."
Streten has seen many of his clients forced to look closely at
their working capital and capital expenditure requirements
to ensure they only take on facilities that are absolutely
necessary. "Given the high cost of capital, investment
decisions have been put under a lot of scrutiny. Increasingly,
individual business lines within companies are being charged
the full amount of their capital usage by their treasury
department. It has certainly focused a lot of minds within
our cliënt base, particularly on the availability of liquidity and
the relative ability, commitment and engagement of their
banking groups."
U ISSUE 18
THE WORD
