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Boosting Mexican balance sheets

In June 2008, RBS arranged a dual-tranche accounts receivables financing programme facility for Mexican consumer goods firm Controladora Mabe, and its main operating subsidiaries.

The scheme features two tranches; a Mex$910mn uninsured accounts receivables financing programme facility and a Mex$190mn insured accounts receivables facility, both booked off shore in Amsterdam.

The deal is the first of its kind to be implemented in a non-standard currency (Mexican pesos) through RBS’s offshore booking centre in Amsterdam. It is the first time any RBS global transaction services unit in the Latin American region has implemented this type of accounts receivable programme, and the deal has helped prove the bank’s ability to support local Latin American businesses through its global network.

Under the terms of the facility, the client is selling its receivables on a non-recourse basis. The receivables are the results of Mabe’s sales of white goods to their largest and most reliable customers. Eligible receivables for the uninsured portion are investment grade accounts debtors rated BBB-. Just over 22% of debtors, in terms of receivable limits, have their parent companies in the US.

For the insured smaller portion of the deal, Atradius Mexico is covering 90% of the eligible receivables.

The deal is structured as a revolving facility, where Mabe acts as the service agent. The tenor of the eligible receivables to be purchased should not exceed 180 days.

When the receivables are purchased, a detailed listing of the receivables offered for sale are to be presented to the bank. At the end of the collection period, and after receiving payments from the debtors, Mabe credits RBS on the agreed payment date, for the face value of the invoices purchased by the bank. A special bank account was opened to centralise the incoming payments collected by the seller.

Elaborating on RBS’s relations with Mabe, Romario Alves Pinto, country head, Mexico, global transaction services, at RBS, comments: “On the supply side, RBS has successfully introduced over 60 of Mabe’s core suppliers into the programme from countries including Mexico, Korea, India, Taiwan, Brazil and the US, enabling them to view purchase orders and invoices online via MaxTrad, which has significantly improved supplier loyalty, as well as reducing errors, discrepancies and delays.”

With the implementation of the accounts receivables purchase solution, RBS has also helped Mabe to meet its balance sheet management targets through improving the company’s days sales outstanding (DSO).

Commenting on the importance of the deal for both RBS and Mabe, Pinto remarks: “With both solutions, supplier and buyer sides, Mabe has extended its relationship with RBS, and we are now one of their top three house banks. This is a clear endorsement of both the quality of our products as well as our commitment to a long-term partnership approach with our clients.”

He adds: “Mabe now has a solution that works for both supplier and buyer, enabling the company to dramatically improve its working capital position, and compete effectively at an international level.”

Deal Information

Borrower: Controladora Mabe Amount: €62.69mn
Lead arranger: RBS
Credit insurer: Atradius Mexico
Law firms: Ritch; Heather & Mueller
Tenor: 180 days
Date signed: June 2008