Receivables Finance

Paper and packaging manufacturer saves €4 million per year

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The Smurfit Kappa Group, a leading global provider of paper-based packaging solutions, has been on the DEMICA platform for three different transactions involving nine European countries and two banks. Our innovative technology was selected to run both a major trade receivables securitization transaction and an invoice discounting programme.

Acquisition by a US private equity firm had fundamentally changed the financial structure of the group and the new board immediately looked to minimize interest costs and pay down senior debt. We facilitated a €260 million trade receivables securitization in the form of a 7-year Medium Term Note receivables financing transaction. This enabled Smurfit Kappa to save €4 million a year in interest costs.

As part of the transaction, we analysed the €800 million global receivables book in order to assess the financial, operational, legal and tax issues that would define the structure of the transaction and then finalized the financial structure of the sale of receivables deal. Based on the stringent invoice eligibility criteria for an AAA rated transaction and the legal considerations in certain jurisdictions, the transaction ultimately included invoices that represented 32.5% of the global trade receivables book. Receivables financing allowed the group to repay a major tranche of senior debt, transforming the risk profile of the post-LBO balance sheet.

“DEMICA’s expertise is impressive. Their technology is very adaptable, completely reliable and has enabled us to efficiently manage a complex programme without tying up internal resources.”
Cormac Maguire
— Head of Treasury Operations, The Smurfit Kappa Group

In phase 2, Smurfit Kappa achieved the flexibility to include additional receivables in their invoice discounting programme and gained tighter control over their internal credit management function. DEMICA then facilitated a parallel securitization programme of €175 million.

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