IDB clinches re-financing deal with six banks

The Irish Dairy Board has agreed a new financing structure, which will underpin its own future expansion and that of the Irish dairy industry

The Irish Dairy Board (IDB) has completed the re-financing of its existing €250m banking facility, which is due to expire in April.

The new facility provides €350m (+€100m) in bank funding for both the board and its members for the next three years.

The re-financing is being provided by a syndicate of six Irish and international banks, with Rabobank the lead bank.

The new funding is an increase of €100m on the existing facilities and has, for the first time, been segmented into two separate funds.

Some €190m has been set aside into what is referred to as a Reverse Invoice Discounting facility (RID), i.e. supplier financing - an increase of €50m on the existing facility. This funding can be used by IDB members to fund their own cashflow and working capital requirements.

Of the €190m, €140m has been allocated as per existing member requirements but it has yet to be decided how to allocate the remaining €50m.

The balance of €160m (also an increase of €50m) has been ringfenced into what is referred to as a Revolving Credit Facility (RCF). This will be used exclusively for IDB's existing business requirements and to develop its international growth strategy in terms of acquisitions, joint ventures, etc. As can be seen from Figure 3, Rabobank is acting as the lead bank and will front and co-ordinate the allocation of these RID funds from the other five banks.

The IDB will co-ordinate and manage requests from all members for funds.

Monies will only be released to the 10 IDB members on the strength of specific invoices, which reflects the product the member supplies to the IDB and which has been pre-approved by the IDB.

This is all managed through a specialised web-based platform, managed by the IDB.

The website will show members their list of pre-approved invoices and they can then decide to select advance payment for any specific invoice(s) from this RID facility, provided the member has available funds from within their designated account.

The banks will then release funds within days on the strength of the pre-approved invoices from the IDB. The IDB will, in turn, pay the bank on the due date of each invoice (Figure 4).