Global satellite group, SES Global SA, had to find a cash management provider with a strong US dollar presence following the acquisition of GE Americom, which turned it into the world’s largest satellite operator. Detuche Bank helped the company manage its US dollar positions for both its European operations as well as its newly acquired operations.
Walter Dilewyns
Group Treasurer
SES Global SA is the world’s leading satellite group, encompassing a network of satellite operators worldwide and offering global coverage reaching 95% of the world’s population. In 2001, SES acquired GE Americom in the United States and moved from being the biggest European satellite company to become the world’s largest satellite operator.
In Europe, SES ASTRA is the leading provider of direct-to-home broadcast services, distributing more than 1,400 TV and radio channels to 103 million homes. SES AMERICOM transmits TV and radio programming to virtually every US cable household and also covers Latin America. Further services provided by SES Global SA include corporate data networks and communications solutions, as well as mobile broadband services.
Problem…
SES Global SA is based in Europe, with both its headquarters and centralised treasury located in Luxembourg. The treasury is mainly responsible for group financing and hedging currency risks. SES Global invoices its European customers mainly in euros and its US customers in US dollars. However, there are significant US dollar flows out of Europe mainly related to financing and hedging activities.
SES Global historically ran centralised cash management operations in Luxembourg. After the acquisition of GE Americom, intragroup funding and cash management had to be executed using inter-company loans. Cross-border payments were initiated out of Europe to the US-based SES AMERICOM unit whenever the US balance sheet was in a deficit position.
Walter Dilewyns, Group Treasurer at SES Global SA, explains: “We could not effectively combine different US dollar flows, because you cannot operate with cross-border payments on a daily basis. It was quite important for us to start a form of cash pooling, as without it, the different operations have a tendency to build up pockets of money.”
In its efforts to centralise its US dollar liquidity position globally, SES Global SA’s objective was to create a regional US dollar cash pool for its European operations and to centralise its position in the US as well.
…Solved
Searching for a cash management provider with strong US dollar presence, SES Global SA considered proposals from multiple banks. Dilewyns said, “You have to look at several factors, such as the bank’s locations and tax considerations around the cash pool. We liked Deutsche Bank’s solution, which brought these aspects together.”
Deutsche Bank Trust Company Americas created a cash pooling structure that enabled SES Global SA to concentrate its global US dollar position in New York. Deutsche Bank’s US dollar Global Cash Concentration service centralises SES Global SA’s US dollar funds in a single account structure under the umbrella of the parent company’s control. By doing so, Deutsche Bank provided the means for SES Global SA to manage its US dollar positions for both its European operating entities as well as its US-based division, SES AMERICOM.
SES Global SA now has the ability to concentrate daily end-of-day surplus balances into New York, or conversely for New York to cover a deficit position in Europe, on a same-day basis. Deutsche Bank also keeps track of the daily cash balance for the participants of the pool so that the integrity of the separate entity positions remains, but SES Global SA can operate as if there is one single US dollar cash pool.
“We basically have built what I call a ‘transatlantic cash pool’, bringing two accounts of the parent company together in NY. One account concentrates all US flows and the other account consolidates all the European flows. These are then brought together in a notional pool, which has the advantage of not mingling the US with the European funds.”
Benefiting from Deutsche Bank’s centralised global US dollar liquidity management solution, SES Global SA is now in a position to move US dollar liquidity cross-border on a same-day basis to where it is needed – predominantly into the US. Same-day liquidity offers SES Global SA greater flexibility in the funding of US operations and also ensures that shortfalls are covered by the European entities, thereby reducing dependence on costly credit lines.
