1 Project & Trade Finance In Netafim around the world

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Project & Trade FinanceIn Netafim around the world

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Largest low volume irrigation company in the world

2005 revenues - $359M

2006 forecast > $400M

Employees worldwide – 2100

Doing Business in 112 countries on 5 continents

35 subsidiaries

11 manufacturing plants

NETAFIM - Overview

12 billion meters of Netafim drip lines can circle the earth’s circumference 280 times or travel to the moon and back 22 times

Facts and Figures

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RevenuesIn millions of USD

222232

265

312

359

408

0

50

100

150

200

250

300

350

400

450

2001 2002 2003 2004 2005 2006 P

408

NETAFIM - Overview

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International Presence

Subsidiaries

11 plants worldwide: Israel. (3 plants), USA, India, Australia, South Africa, Brazil, China, France, Chile.

Manufacturing plants

NETAFIM - Overview

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Future Growth Engines

New crops (Energy Crops)

New Markets

Gaining market share in existing countries

New products ( develop or acquire )

M&A’s ( markets and technologies )

Operational excellence

Project financing solutions

NETAFIM - Overview

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Financial sourcesFinancial sources

Shareholders / Owners Capital

Vendor financing

Third party financing

Bank Loans (Buyers Credit)

Leasing

Governmental institutes (Municipality, State, Federal)

World bank institutes (World bank, IFC, MIGA, EBRD, EIB, IADB)

NETAFIM – Project Financing Solutions

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Letter of CreditLetter of CreditThe buyer asks his bank (the Issuing) to issue the L/C. The L/C is to be advised by the Supplier bank (the Advising bank).

Buyer

Issuing bank.

L/C

Supply agreement

Netafim

Advising bank.


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Promissory NotesPromissory NotesThe buyer is giving the Supplier P/N. On due date the Supplier presents the P/N in the bank for collection.

Customer

Netafim

Bank Collection

P/N

Presentation Supply


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Buyers CreditBuyers CreditA Bank approved by the buyer and Netafim grants a loan to the Customer to finance the purchase of Netafim equipment.

Customer

Netafim

Bank Loan

Supply

Payment


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Crates payments (1)Crates payments (1) Netafim and the customer sign a supply agreement.

The distributor commits to support the customer.

Customer signs P/N to support its commitment and installments. The Bank provides ICL.

CustomerNetafim

Bank

Irrevocable payment commitment letter per

crate

Supply agreement

Distributor in Other country

Irrevocable commitment letter


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Crates payments (2)Crates payments (2)

After the harvest, the Customer supplies the products to the Distributor according to their agreement.

CustomerNetafim

Bank

Deliveries

Distributor in Europe


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Crates payments (3)Crates payments (3)

The Distributor transfers payments – the payment is divided by the Distributor or by the bank.

CustomerNetafim

BankPayment

70%


Escrow account

30%


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Umbrella guarantee (1)Umbrella guarantee (1)

Netafim signs a supply agreement with the customer. Payment terms – open account.

CustomerNetafim

Bank Distributor in Other country


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The Distributor and / or the bank issue a “Payment guarantee” to support the credit.

CustomerNetafim

Bank Distributor in Other country


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If the customer does not pay – Netafim utilizes the guarantee.

CustomerNetafim

Bank

Non payment



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Payment schemesPayment schemesSchemeL/CProm.

NotesBuyers Credit

Crates payments

Umbrella guarantee

SecuritiesN/ABank AvalTo be agreed with the bank

Harvest and others

Bank Guarantee

Advance Payment

No need15%15%20%-25%15%

Total credit period

Up to 5 years

Up to 3 years

Up to 5 years

Up to 5 years

Up to 3 years

Grace Period

Up to 9 Months

Up to 6 months

Up to 12 months

Up to 12 months

Up to 6 months

InstallmentsSemi-Annual

Quarterly or S.A.

Quarterly or S.A.

Quarterly and current

Quarterly or S.A.

Interest LIBOR + 2%

LIBOR + 3.5%-4%

LIBOR + 2%-3%

LIBOR + 2.5%-4%

LIBOR + 3.5%-5%


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Rolling the FinancingRolling the Financing – –the Distributor solutionthe Distributor solution

In Brazil, we are working with many Distributors.

The Distributor would like to use our Financing capabilities to promote his sales of our products.

We found a solution based on few critical items:

1. The Distributor must be strong financially.

2. Our sales to the Distributor must be final and not B2B.

3. The Distributor must present list of customers, contracts amounts and credit terms.

4. The Distributor needs to provide acceptable collateral.


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Rolling the FinancingRolling the Financing

Netafim signs with the Distributor, the Distributor signs with the customers.

Netafim

DistributorFarmer

Financing Agreements

Financing AgreementFarmer

FarmerCustomer


Documents

1 Project & Trade Finance In Netafim around the world