Export Factor: Banco Monex Mexico
Import Factor: The CIT Group / Commercial Services

Back-To-Back International Factoring Modality with Mexican Exporter and American Importer

Explanation of the deal

Banco Monex's Client, with more than 10 years of relation, entered into “reorganization bankruptcy” known as Chapter 11, suspending all its payment obligations. ​The company needed liquidity to face all the payment obligations but was unable to apply for any loan or financial products. ​

Banco Monex proposed a structure to provide financing on a non-recourse basis. The proposal consisted in a B2B (Back-to-Back) International Factoring modality, in which CIT evaluated and approved credit cover for 4 American Buyers (USD 2.5 million) of the American Subsidiary, as follows.​ The B2B structure implied new/additional legal documents, including a Side Letter signed by Banco Monex & CIT, as well as some other steps. Banco Monex has operated on more than 4 cases of B2B modality with CIT.

Why is this deal unique?

• Authorizing internally a Seller who had just come out from a Chapter 11.​
• Onboard the two Sellers (Mexican & American) to the legal structure (Factoring Agreement) in order to bind them both, ​
• Elaborate on new legal documents from the Import and the Export Factor's side, and ​
• Understand how the UCC works and find a law firm to work with in this matter. ​
• It is unique because there are no Mexican Bank financing invoices issued outside Mexico without granting a traditional credit line to a Mexican Seller. 

Export Factor: Kuveyt Türk Katilim Bankasi A.S.
Import Factor: ABN AMRO Asset Based Finance N.V.

Seller: A Plastic supplier of Stretch Film in Turkey
Buyer: Based in France

Explanation of the deal
The deal is completed under the Islamic Factoring context. After the completion of the onboarding process with the import factor by the signing of the Supplemental Agreement, we have focused on seller selection. Following the b/m criteria we have both fulfilled factoring and basic Islamic principles;

- Order-based approval is where an order or sales contract is approved by the factor. Islamic Factors are involved in the trade at the early stages checking the seller’s nature of business including sales conditions, products and services in line with the Islamic principles before accepting the business.

- The receivable is related to a bona fide sale of goods or rendered service. Islamic transactions are based on good faith. Islamic Factors mediate the trades arising from halal goods and genuine trade. 

Why is this deal unique?

• The first international transaction under the scope of the Supplemental Agreement for Islamic International Factoring in FCI since the product has been released. ​
• The effort and the hard work that we put into realizing this brand-new product.​
• Kuveyt Turk believed in this product and dedicated a whole team from IT developers, risk managers, Operations, Financial Institutions, accounting etc.​
• We have negotiated with tens of factors and introduced the product to factors in order to have a correspondent relationship and encourage them to cooperate with new Islamic members of FCI. 

Export Factor: Standard Chartered Bank Korea Limited
Import Factor: BNP PARIBAS Factor France

Seller: A Movie Studio in Korea
Buyer: A Major TV Streaming Platform in the USA

Explanation of the deal

The seller produces very successful Korean TV series or dramas that reach a global audience thanks to the buyer’s presence all over the world. The buyer ordered a large number of dramas to be delivered over the next years. High production costs combined with the long payment terms (up to two years) result in a significant strain on its cash flow.​ 

Standard Chartered Bank decides to offer the opportunity to BNP Paribas Factor, providing very detailed information on how receivables are issued by the seller and how the buyer pays by instalments with terms up to two years. The highly unusual features of the deal are discussed at length between both factors.

BNP Paribas Factor's Insurer approved the risk structure and in turn confirmed the full credit cover (in excess of $40 million) to Standard Chartered Bank, making the deal possible. Having a 100% credit cover on such a large and complex operation proves to be a decisive success factor. Once again, FCI’s famous two-factor system shows its relevance.

Why is this deal unique?

• Single buyer exposure with a significant credit cover (over $40 million).​
• Unusually long payment terms (up to 2 years). ​
• Need for a 30-day grace period in case of reduction/cancellation of the credit cover.​
• A specific Supplemental Agreement was signed between the Export Factor and Import Factor.​
• The buyer has a ban on the assignment that had to be waived with the seller’s support.​
• No factoring commission is charged by the IF, only an annual fee.​
• It is the first cross-border factoring transaction based on K-dramas/TV series with global OTT(over-the-top) platform.   
• It is structured deal with tailored solution to enable payment terms up to two years.

Export Factor: India Factoring and Finance Solutions (IFFS)
Import Factor: The CIT Group / Commercial Services

Seller: Vendors of electronic PCB boards in India
Buyer: Global MNC buyers across various sectors which use PCBs as essential components

Explanation of the deal

IFFS is providing an Export Factoring Non-Recourse facility to one of the leading Electronic Manufacturing Services (EMS) Manufacturer in India. EMS is a sunrise industry. With the current geo-political situation immediately preceded by a global pandemic, the supply chain issues have led to a tremendous shortage of Semi-conductors / chips forming essential components for most Electronics Industry. Consequently, our client is addressing a mission-critical gap across the global supply chains on the Electronic chips front in EMS space. The client supplies leading MNC buyers across the world. Most sectors need chips / printed circuits as an essential component for the final product.

Why is this deal unique?

• Unlike regular exports, here India Factoring finances from the post-shipment stage itself rather than waiting for acceptance from the buyer, which enables much earlier working capital facilitation for the client.
• Complex deal structure & require lots of monitoring & control mechanism.​
• Even with marginally higher costs, the customer understands the optimal cost of working capital including a de-leveraged balance sheet on top of risk mitigation. Moreover, under IFFS advisory on ring-fenced structuring, the customer can negotiate well with the buyer including amending the agreement with favourable terms in case of exigency.
•  

Export Factor: TBC Bank
Import Factor: ArmSwissBank

Seller: A Cocoa Company in Georgia
Buyer: A Chocolate Company in Armenia

Explanation of the deal

With the support of the EBRD and FCI, TBC Bank and ArmSwissBank supported cross-border factoring transactions for their customers' ongoing trade. This transaction relates to international trade between an Armenian importer and a Georgian exporter. The buyer imports cocoa mass from the seller for production and the further export of high quality chocolate.

Why is this deal unique?

The first cross-border factoring transaction, backed by an EBRD guarantee via the FCI platform.​
Challenges:​

• Make product change smooth for customers.​
• Ensure product remains affordable for companies.​
• Transaction structuring.