|
18. Trade Receivables Securitization Program
In January 2010, Bunge adopted certain amendments to ASC Topic 860 Transfers and Servicing that resulted in amounts outstanding under its then existing securitization programs being accounted for as secured borrowings and reflected as short-term debt on its consolidated balance sheet. As a result of this change in accounting standards, Bunge significantly reduced its utilization of these programs and either terminated or allowed them to expire during 2010.
On June 1, 2011, Bunge and certain of its subsidiaries entered into a trade receivables securitization program (the "Program") with a financial institution, as administrative agent, and certain commercial paper conduit purchasers and committed purchasers (collectively, the "Purchasers") that provides for funding up to $700 million against receivables sold into the program. The securitization program is designed to enhance Bunge's financial flexibility by providing an additional source of liquidity for its operations. In connection with the securitization program, certain of Bunge's U.S. and non-U.S. subsidiaries that originate trade receivables may sell eligible receivables in their entirety on a revolving basis to a consolidated bankruptcy remote special purpose entity, Bunge Securitization B.V. (BSBV) formed under the laws of The Netherlands. BSBV in turn sells such purchased trade receivables to the administrative agent (acting on behalf of the Purchasers) pursuant to a receivables transfer agreement. In connection with these sales of accounts receivable, Bunge receives a portion of the proceeds up front and an additional amount upon the collection of the underlying receivables (a deferred purchase price), which is expected to be generally between 10 and 15% of the aggregate amount of receivables sold through the program.
Bunge Finance B.V. (BFBV), a wholly-owned subsidiary of Bunge, acts as master servicer, responsible for servicing and collecting the accounts receivable for the securitization program. The securitization program terminates on June 1, 2016. However, each committed purchaser's commitment to fund trade receivables under the securitization program will terminate on May 31, 2012 unless extended for additional 364-day periods in accordance with the terms of the receivables transfer agreement. The trade receivables sold under the securitization program are subject to specified eligibility criteria, including eligible currencies and country and obligor concentration limits. BSBV purchases trade receivables from the originating Bunge subsidiaries using (i) proceeds from the sale of receivables to the administrative agent, (ii) collections of the deferred purchase price and (iii) borrowings from BFBV under a revolving subordinated loan facility.
As of December 31, 2011, $836 million of receivables sold under the Program were derecognized from Bunge's consolidated balance sheet. Proceeds received in cash related to transfers of receivables under the program, totaled $7,531 million from inception of the program through December 31, 2011. In addition, cash collections from customers on receivables previously sold were $6,872 million. As this is a revolving facility, cash collections from customers are reinvested in new receivable sales. Gross receivables sold under the program since its inception were $7,778 million. These sales resulted in a discount of $5 million. Servicing fees under the program were not significant.
Bunge's risk of loss following the sale of the accounts receivable is limited to the deferred purchase price, which was $192 million at December 31, 2011. The deferred purchase price will be repaid in cash as receivables are collected, generally within 30 days. Delinquencies and credit losses on accounts receivable sold under the program during 2011 were insignificant. Because the cash received up front and the deferred purchase price relate to the sale or ultimate collection of the underlying receivables, and are not subject to significant risks, other than credit risk, given their short-term nature, Bunge has reflected all cash flows under the securitization program as operating cash flows in the consolidated statement of cash flows for the year ended December 31, 2011, including changes in the fair value of the deferred purchase price of $4 million. |