SHAREHOLDER RETURNS

French textile manufacturer consolidates global reach
by ‘deconsolidating’ its assets.

This company was able to reward its shareholders while keeping its operational backbone secure through our capital.

Profile
Chargeurs Wool leads its industry in designing different grades of wool blends to meet the needs of the spinners in its customer base, then transforming them into wool ‘tops’ through its global network of wool processing facilities. Based in France, it averages today revenues of around €80 million.

Cyclical in nature, the wool business is subject to fluctuations in raw material prices. Chargeurs Wool has developed special procedures and systems for identifying and tightly managing risks, whether related to raw materials, trade or manufacturing operations. The order book is diligently managed with constant tracking of contractual commitments.

Context
When we met in 2002, Chargeurs had already set up ‘Chargeurs Wool Partners’, a new company that it could sell receivables to. Financed through a large European bank in 1998, the notes would mature in July 2003. So Chargeurs launched the refinancing process.

At this time Chargeurs Wool Partners became an exclusive platform dedicated to financing contracts, and abandoned the purchase of receivables originated by Chargeurs.

Transaction
In order to maintain off-balance-sheet accounting treatment, Ocean acquired Chargeurs Wool Partners putting in place capital and a control package that satisfied the auditors and regulators while keeping Chargeurs comfortable with the long-term security of its global operations. The deal meant the assets remained ‘deconsolidated’ in full compliance with the rules of both the new International Accounting Standards and the Autorité des Marchés Financiers (the French financial services regulator).

Outcome
Over the past 12 years, through the ongoing renewal of this transaction, Chargeurs has improved its shareholder value. By unlocking cash from the business, the company has funded share buybacks, improved its overall balance-sheet management, focused management on capital allocation, improved asset risk management and reduced the volatility of its earnings.

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Testimonial

“Ocean’s unique approach to releasing capital is perfectly suited to businesses trading in commodities such as oil.

“I have worked on several transactions with Pedro. Each time, he has personally led the process, always achieving the objectives set by the client and staying fully committed every step of the way.”

Pierre Lorinet,
CFO, Trafigura Beheer