Receivable-based finance Michel Jansen Amador Malnero CFO Clondalkin ING Working Capital Solutions

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Agenda

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• Clondalkin’s refinancing and the added value of using receivables Michel Jansen Clondalkin

• Deep dive into receivable-based finance Amador Malnero ING

• Implementation experience from the perspective of Clondalkin Michel Jansen Clondalkin

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Clondalkin’s refinancing and the added value of using receivables Michel Jansen CFO Clondalkin

Clondalkin Group

• Leading international producer of high value added packaging products and services

• >€ 700m revenues with strong and consistent cash flow generation

• 35 locations in 8 countries

• Market leader in secondary healthcare packaging with #1 position in North America and #3 position in Europe

• Leading positions in European flexible packaging markets

• Well diversified business portfolio and geographic footprint

• Well invested facilities

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Each division has a blue chip customer base

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Specialist Packaging (55% of sales) Flexible Packaging (45% of sales)

Foils, Laminates &

Coatings

Engineered films

• Folding cartons, leaflets, literature, inserts and labels • Laminates of aluminium, paper and film

• Resin based laminates

Setting the Scene

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Issuance high yield bonds:

€170m fixed rate bonds maturing in 2014;

€413m floating rate bonds maturing in 2013 In light of the upcoming maturities of the bonds, beginning

of strategic reflection on the refinancing. Objectives:

• Refinance existing debt

• Reduce leverage

• Reduce financing costs

Several routes are pursued with implementation beginning in 2012

and target closing before mid 2013:

• Sale of various divisions in the group both in Europe and USA

• Refinancing of the senior Revolving Credit Facility

• Issuance of new debt in the markets

• Setup of off-balance sheet trade receivables securitisation

transaction

2004 2012 2007 2012 - mid 2013

Clondalkin mandates ING as sole arranger for a €90m

equivalent transaction

Considerations:

• Multi jurisdiction and multi currency businesses (35

sites in 8 countries selling to > 130 countries)

• Decentralized collection structure (10 different local

ERP systems)

• Difficult environment to launch a Company wide

Securitization project

May 2013

Scope of the Project: the challenge

• Deliverables:

Minimum funding > €60 million

High advance rate on the receivable book (>80%)

Funding at acceptable pricing levels

Off Balance

Multi jurisdictions

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Sources Uses

Net Cash proceeds from disposals 135 Repayment of borrowing 585

Cash proceeds from receivable-based finance 65 Cash to balance sheet before fees 52

Term B Loans 349

Existing Cash 88

Total sources 637 Total Uses 637

• Timing:

Within five months

Parallel to disposal process and refinancing process

• Costs

Set-up costs < 2.5% of maximum program amount

Minimize costs for maintaining the structure

Clondalkin structure visualised

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1. Each seller sells eligible receivables to ING on

a daily basis

2. On a monthly basis ING pays the purchase

price on portfolio to Clondalkin Acquisition BV

(hereafter Clondalkin or Master Servicer)

3. Clondalkin, as subordinated lender pays to ING

the loan sized to equal the required reserve

(10-15% program)

4. The Master Servicer passes the collections on

receivables sold to ING

5. In case of defaults under the receivables,

Atradius as credit insurer pays 90% of each

claim to ING

Purchaser

Atradius

Credit Insurer

Clondalkin Acquisition B.V.

Master Servicer /

Subordinated lender)

Clondalkin OpCo 1

(Seller)

Clondalkin OpCo …

(Seller)

Clondalkin OpCo x

(Seller)

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2 3 4

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Securitization: an essential piece

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• The Group entered into a Receivable Purchase Agreement (RPA) with ING to sell its trade receivables

• Off-balance financing facility

• App. 80% advance rate (testimony to strong book)

• Initial proceeds €65 million (May 2013)

• Maximum program amount €90 million

• All-in finance costs c. 4.6% p.a. (incl. cost of maintaining the facility)

• Daily, weekly and monthly reporting routines by our businesses of the sales and cash receipts

Deep dive into receivable-based finance Amador Malnero Managing Director Working Capital Solutions - ING

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Setting the scene

Scarcity of liquidity Stricter regulations Economic downturn

Economic environment pressures profitability

Basel III and regulation of FI’s

are constraining capital and

lending

Liquidity is scarce and banks are de-leveraging

• Working capital management has moved to the top of the agenda

• Worldwide receivable financing has increased from €1.3tr in 2007 to €2.2tr in 2013 (Europe €1.4tr¹)

• Treasurers seeking ways to unlock funds trapped in O2C and P2P

• Banks focusing more on flow and trade products

• EU Late Payment Directive

1. Factor chain international;

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• Cash flow improvement / Working capital optimisation

• Financial ratio management

• Improve return on capital employed

• Funding diversification

• Pricing benefits

Drivers for clients to choose working capital products

Single debtor

A/R A/R

A/R

A/R A/R

A/R

A/R A/R

A/R

A/R A/R

A/R

Receivables Pool

Non-granular portfolio

TRPP

Trade Receivables

Purchase program

Single/multiple

invoice(s)

ICRF

International Corporate Receivables Finance

Approach:

Granularity:

ING Solutions:

Multiple debtors

ING’s receivable-based financing solutions

Portfolio approach

Granular portfolio

• Each solution depends on the number of debtors and volume of trade receivables

• Each solution is tailored to the specific needs of the client

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Method of funding using

securitisation techniques

Principles of TRPP

Structures mitigate the

traditional credit risk

Structures set up in

accordance with S&P

methodology

• Granular homogeneous pool of assets

• Isolated from credit risk of the originator; transferred to ING via true sale

• Continuously refilled with new assets

• Reliance on performance of portfolio for repayment

• Insulation from or mitigation of the exposure to the originator events

• Credit enhancement typically up to AA

• Ring-fencing, true sale of the pool of receivables

• Credit enhancement by dynamic reserves

• Structural mechanisms activated by triggers or financial covenants

• In order to achieve equivalent of AA rating, analysis of:

pool historical performance and

transaction structural features

Key principles of TRPP (Trade Receivables Purchase Program)

Obligor 2

Obligor 3

Obligor 1

Obligor 4

Obligor …

Obligor N

Simplified TRPP: portfolio structure

Portfolio of trade

receivables

* please note that multiple-originators and multiple-jurisdictions could be brought under one program

Purchaser

Receivables Purchase Agreement

Servicing Agreement

Receivables

Purchase

Price

Collections

True sale

Credit Insurer

(if any)

Collections

Receivables

Products

Originator*

Credit

Insurance

Policy

Portfolio approach with the seller selling a diversified pool of trade

receivables from multiple debtors

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Key benefits of TRPP for Clondalkin

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Funding

• Provides funding

access to lower rated

clients…

• Allows competitive

pricing compared to

other funding sources

• Scalable to finance

trading growth

• Diversification of

funding sources

Off-balance sheet

treatment

• Possibility to achieve off-

balance treatment

- credit insurance

- substantial transfer of

risks and rewards

(auditor confirmation)

• Strong balance sheet

management tool

- improved financial

ratios

- lower pricing grid

thanks to ratios

enhancement

Flexibility

• Customised

(organisation structure

and objectives)

• Portfolio approach

provides flexibility in

terms of pool

composition

• Multiple jurisdictions

and originators possible

• Silent assignment: no

impact on commercial

relationship with debtors

Management tool

• Encourages best

business practices

through due diligence

of policies, procedures,

systems and data, and

dynamic monitoring of

portfolio's performance

• Centralisation or

supervision of the

servicing by the master

servicer

TRPP: A powerful tool for managing working capital needs

Implementation experience from

Clondalkin’s perspective

Michel Jansen

CFO Clondalkin

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Experience and Learnings: the funding

• The Initial Funding size is determined by

the size and quality of the Accounts Receivable Book

eligibility criteria (agreed invoices to be acquired)

historic performance of the collections process (cash reserve rate)

• The Funding fluctuates minimally over time under influence of:

the balance between collections and new issued invoices

quality of the order to cash process

• Flexible structure: allows for partial implementation (bridging facility through two tier structure).

• Resulting in a permanent funding, funding grows as the business grows

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Experience and Learnings: the structure

• Automate the data flow and reporting

We have co-developed a cloud based platform for the data flow and reporting requirements

Manage eligibility criteria

Monitor historic performance of the collections process

• We gained significant insight in our accounts receivables through the scientific approach enforced through the securitization process.

Develop or buy tools that help improve the performance of the order to cash process (reminder on line and dispute management system)

Detailed insight in credit terms and its development

Flexible structure: allows for partial implementation (bridging facility through two tier structure).

• Becomes routine

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Concluding remarks

• In ING we found a partner that was willing to pioneer with us

• We reduced the quantum of debt required from the Financial Markets

• We diversified our financing structure

• The structure is flexible, resulting in permanent funding with funding levels increasing in line with growth of the underlying business

• We lowered the average financing costs compared to the alternatives available at the time

• We realized a significant Working Capital reduction

• We gained significant insight in our accounts receivables through the scientific approach enforced through the securitization process

Nobody told them it could not be done …........... So they just did it!

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Q&A

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Disclaimer

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This presentation prepared by ING Bank N.V. (“ING”) is intended to provide information and to serve as a basis for discussion purposes only. While

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verified the information herein and accordingly makes no representation or warranty, express or implied, that the information contained herein is accurate,

current, complete or correct. Any estimates in this presentation are provisional only and for indicative, preliminary and illustrative purposes only. This

presentation does not constitute any valuation, appraisal or advice and there can be no guarantee that any projected results will be achieved. ING reserves the

right, but does not have any obligation, to amend or change such projections or assumptions if ING deems it appropriate to do so. This presentation does not

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