études de cas

T.F. Case Studies

The below case studies are illustrative of the transactions that Stern typically evaluates:

Scrap Metal Trader.

A U.S.-based scrap metal trader, the beneficiary of 90-day deferred letters of credit (“LC(s)”) from his Pakistan and Bangladesh-based buyers, needed assistance paying his U.S.-based suppliers who, in turn, demanded payment on delivery.

Stern offered a financing line of $1 million – which would have allowed the scrap metal trader to pay his supplier – while also discounting the Pakistani and Bangladeshi LCs. This would have solved the trader’s problem by removing the funding gap between the time he had to pay his supplier and the time he received payment from his buyer. Additionally, by discounting the inbound LCs, Stern could remove the risk of non-payment by the buyers. At the same time, Stern – leveraging its network of freight forwarders – planned to arrange for the shipment of the scrap metal between the U.S. and South Asia.

Coffee Seller.

An Australian-based coffee trader had a well-established business in his home country and wanted to expand abroad. While his suppliers were paid on delivery, the trader nonetheless sought to provide 90-day credit terms to his U.S. buyer.

Stern offered a $150,000 standby letter of credit (“SBLC”) facility for the coffee trader’s buyer, under which funds were to be advanced to the trader. The trader would then receive funds on delivery, and the buyer would be provided a 90-day window to make payment. As this was a re-occurring transaction, the SBLC was proposed as a revolving facility. This would free up critical cash for the trader, enabling him to expand his business and seek other buyers across the world.

Equipment.

A U.S.-based equipment manufacturer had a contract with an agency of a foreign government. In order to fulfil the contract, the agency required the manufacturer to provide a performance guarantee (“PG”) – but the PG could only be issued by a bank in that foreign country.

Through Stern’s network of correspondent bank relationships, Stern was able to effectuate what is commonly referred to as a “counter” performance guarantee, whereby the PG would ultimately be issued by a bank in that foreign country. This solution enabled the manufacture to fulfil the contract and to maintain his relationship with the foreign government agency. Stern also extended the customer credit terms so that he had the liquidity to facilitate transactions with other clients.

Plastic.

A UK-based trader sourced plastic products from East Asia and sold them to a Uganda-based company, which paid 180 days after delivery.

Stern assisted in structuring the deal, using bills of exchange avalized (or guaranteed) by a Ugandan bank. Stern then planned to discount the bills, pay funds in advance to the supplier, and remove the non-payment risk to the supplier. The trader would receive funds immediately, and the buyer would still be able to receive the 180 day-credit term he required.