BNP Paribas proposed a one-year committed renewable, syndicated €500m Receivables Purchase Programme in favour of the 12 sellers to purchase the receivables due from the obligors carved out from the existing securitisation programme. It is a primary syndication programme comprising six of Lenovo’s core relationship banks1 where BNP Paribas acts as the Global Coordinator, Bookrunner and Facility Agent of the programme.
BNP Paribas was able to meet each of Lenovo’s requirements as follows:
With the full regional cooperation between the BNP Paribas teams in EMEA and APAC, the bank was able to ensure a smooth transition of the obligors carved-out from the existing programmes by carrying out the implementation of the programme in phases without disrupting the existing trade flow operation between Lenovo and the obligors.
While the market standard is for an uncommitted structure of receivables purchase programme, the bank was able to leverage its solid structuring expertise and in-depth understanding of Lenovo’s credit profile as well as supply chain flow, enabling the programme to be structured in a committed nature.
Lenovo’s RCF syndication covenants do not allow its collection accounts to be pledged to the syndicate banks. As such, an escrow account was opened by BNP Paribas Hong Kong with BNP Paribas Group Luxembourg to handle this syndicated deal, where the collection of receivables flows directly from obligors into the account accessible by Lenovo, simplifying operational processes while fully mitigating commingling risk that would have been borne by the syndicate.
There are two different insurance policies under the programme covering the payment risks of the account debtors, issued by a primary insurer and a top-up insurer respectively. The bank was able to provide a structure where Lenovo can benefit from the increased limits on the obligors brought by the top-up insurer, while ensuring that both insurance policies are compatible and seamlessly included under the programme.
We are delighted to be named the Overall Winner of the Best Funding Solution category at the Adam Smith Awards Asia, which holds a distinguished position for recognising excellence and innovation in corporate treasury. This accolade is a testament to our team’s pursuit of innovative, efficient and risk-mitigated treasury solutions with our banking partners.
Koh Ser Mein, Head of Director, Insurance & Treasury Operation
Best practice and innovation
The escrow account solution allows repayments by the obligors to flow directly into the account on invoice due date, satisfying Lenovo’s existing covenants with their respective lenders, while also limiting the risk taken by the syndicate on BNP Paribas. A system of consolidate maturity dates (CMDs) was set-up as part of the structure where Lenovo will reconcile the collections received from obligors on the CMD, reducing operational workload on both sellers and the bank’s side. Such a structure also provides Lenovo with visibility of the collections, greatly aiding their operational process.
Lenovo has procured a top-up insurance policy to cater for the strong sales demand from certain obligors.
Bespoke legal documentation executed between all Lenovo entities across different jurisdictions, the facility agent and the syndicate via a single receivables purchase agreement.
Key benefits
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Cost savings.
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Process efficiencies.
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Increased automation.
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Risk mitigated.
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Improved visibility.
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Number of banking partners/bank accounts reduced.
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Manual intervention reduced.
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Future-proof solution.
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Improved key performance indicator (KPI) metrics.
