Global Trade Receivables Securitization
DACT Treasury Fair November 11, 2011
Steven Claassens, Bunge Corporate Treasury
Introduction Bunge
2
… With a 192-Year History
Establishes
operations in
Argentina to
trade grain
J.P.G.
Bunge
founds
Bunge &
Co. in
Amsterdam
1905
1884
1918
Moves
headquarters
to U.S. and
creates
international Opens first
soybean
marketing
processing
unit
plant in China
Makes first export of
soybeans from Brazil
Starts business
in North America
1859
1818
Builds largest U.S. soybean
crushing and refining plant
Builds first soy
processing plant in U.S.
1938
1945
1997
1967
70s & 80s
Purchases
edible oils
company
Walter Rau in
Germany
1999
1998
2002
2001
Relocates to
Antwerp to
trade
commodities
Diversifies along the
food production chain
2009
2007
2005
2008
2010
Purchases
Santa Juliana
sugarcane mill
in Brazil
Enters Brazilian
fertilizer market with
purchase of Serrana
Expands
into Brazil
and enters
the wheat
milling
business
In Brazil,
sells
fertilizer
nutrients
business
and adds
five new
sugarcane
mills with
Moema
purchase
In Brazil,
purchases soy
processor
Ceval and
begins
acquisition of
new fertilizer
brands
Purchases Cereol
to become the
world’s largest
soy processor
Goes public on
NYSE and becomes
Argentina’s leading
agribusiness
company
Begins building an
export terminal in
the U.S. Pacific
Northwest and a
crushing plant in
Vietnam
3
A Leading Global Agribusiness & Food Company
Key Facts
Long-Lived Assets ~ $ 7 bn
Revenue 2010: $46 bn
Market Capitalization: ~ $ 10 bn
Rating: Baa2/BBB-/BBB
Agribusiness
Sugar & Bioenergy
Food & Ingredients
Fertilizer
Other
6%
17%
35%
7%
35%
Employees: ~32,000
Facilities: ~400
Countries of Operations: 30+
Agribusiness
Sugar & Bioenergy
Food & Ingredients
Fertilizer
4
Global Presence
5
Overview Global Trade Receivables Securitization
6
Objectives
• Alternative source of capital
• Funding at favorable rates
• Global & scalable program
• Enhanced operational efficiency
7
Alternative source of capital at favorable rates
• 5-year program, backed with 364-day liquidity facility
• Primary funding via bank-owned Commercial Paper Conduits
• Good momentum as conduits are eager to invest in trade receivables:
- Low-risk asset class
- Matching maturity with commercial paper (up to 60 days)
• Reciprocity: syndication with 4 core relationship banks
• All-in cost of fund 1M Libor ~ 115 bps (mainly depending CP Cost of Fund)
• No financial covenants, only wind down events
8
Global & scalable program
• Economies of scale resulting in higher funding capacity:
 Minimize excess country and obligor concentrations
• Scalability of the program:
 Add jurisdictions and currencies
• Scalability of facility amount:
 Absorb higher volume (organic growth, higher prices, acquisitions)
• In recent years, more countries have developed legal and regulatory framework
to allow cross border securitization, however increasingly tax is used to narrow
budget deficit gaps
9
Enhanced operational efficiency
• Replacement of three local securitizations and five factoring facilities in North
America and Europe
• Centralized set-up, management and administration by Treasury
• Data-gathering, reporting and analysis outsourced to well-known service provider
(Finacity)
• Cashless settlement via in-house bank
• One-off audit opinion for US GAAP off balance sheet treatment
10
Notable highlights
• Structure:
- US (5 originators), Canada, Spain, Portugal, Italy, Germany, Hungary
- Multi-currency facility: USD, CAD, EUR, HUF
- 26 eligible obligor jurisdictions
• Effective liquidity management by daily re-investment of collections
• Collections remain on Bunge’s bank accounts
• Trade receivable portfolio structured on an implied AA-rating
• Funding base can be affected by sales volumes, commodity prices, FX-volatility
and country & obligor ratings
• Advance rate 85%-88% (aim was 80% or higher)
11
Structure & Implementation
12
Structure
Lead arranger: Rabobank
Purchasers: Rabobank, Credit Agricole, HSBC, BNP Paribas
Conduit
Purchaser
Committed
Purchaser
Conduit
Purchaser
Cash & DPP
Committed
Purchaser
Conduit
Purchaser
Funding (if no CP issued)
Benefit
Administrative
Agent
100% Sale of Receivables
Committed
Purchaser
DPP =Deferred Purchase Price
(~ first loss reserve)
DPP Cash
Subordinated Loan
(~ DPP + excess concentration)
Servicing
SPV
Master Servicer
Fees
Subordinated
Lender
Principal + interest
Cash *
True sale of
receivables
Cash*
Intermediate
Purchaser
Cash *
True sale of
receivables
Originators
Originators
* Face value -/- discount
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Monumental Coordination
11 Bunge
Originators in
7 Jurisdictions
Transaction
Counsel
IT resources
Internal Legal Counsel
(US and Europe)
Internal & External
Legal Counsels
Numerous Collection
Account Banks in all
Jurisdictions
Internal &
External Tax
Internal Accounting
& Control
Auditors
Syndicate Banks
Bunge
Rabobank
Treasury
London/NY
Collateral Audit Firm
Internal
Credit/Tax/Various
Rating Agencies
Finacity
Finacity
14
Key considerations
• In-depth analysis (receivables portfolio, contracts, A/R & credit management, ITsystems, bank accounts)
• Communication & commitment:
- Dedicated project team (very different from RCF, bi-laterals etc.)
- Reasonable timelines and clear requirements for operating companies
• Structuring & Syndication:
- Selection of lead arranger
- Deal structuring with lead arranger only (use Top Tier law firms)
- Custom-made (structure to specific company needs / features)
• Early blue-print of Day-to-Day management: outsourcing, IT-support, data
gathering, reporting / analysis, settlements
15
Next Steps – new countries to be added
16
Questions
17