Founded in the 1930s, our client’s company is a European service provider operating primarily in the facility and waste management sector. Its facilities service management business is part of an industrial conglomerate employing 10,000 persons. Consolidated annual turnover is circa €300 million, about 75% of which comes from public entities.
Our client’s challenge
The company wanted to merge its facilities and waste management activities and to launch an IPO for this enlarged business unit. To meet these aims the company approached a European Investment Bank (“EIB”) to arrange a securitisation of the trade receivables (the “Transaction”) to achieve off-balance sheet treatment for the company. Another objective of the Transaction was to increase the funding of company to enable expansion of its activities and operations beyond the home market.
The EIB agreed to finance $100 million of trade receivables on a non-recourse basis for five years and funded the purchase through the sale of commercial paper.
B&C structured and funded the junior loan which was structured to enable the company to meet the IAS 39 requirement by providing an element of control over the assets, as well as credit enhancement for the mezzanine and senior debt.
Rationale for our client as originator
As a result of the transaction, the receivables are turned into cash immediately upon sale to the bank. The debt backed by the receivables is not consolidated in the balance sheet of the company. The cash received by the company was used to repay on-balance sheet debt. The existing debt capacity was refocused to acquire other businesses.