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EFFECTIVE SECURITY

INSTRUMENTS FOR TRADE CREDITORS SELLING TO

LATIN AMERICA

2©The Alta Group 2012

About the Panelists

Moderator: David H. Conaway, Senior Partner Shumaker, Loop & Kendrick, LLP

Panelists:Patricia Medeiros, Legal Counsel Syngenta BrazilOmar Guerrero Rodriguez, Partner, Barrera Siqueiros and Torres Landa, MexicoRafael Castillo-Triana, CEO FTAA Consulting, Inc and The Alta Group Latin American Region, LLC, Fort Lauderdale, Florida

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Moderator: David H. Conaway

▶ Partner in the Charlotte office of Shumaker, Loop & Kendrick, LLP, an American Lawyer and National Law Journal Top 350 U.S. Law Firm, having five offices and over 250 legal professionals.

▶ Honored as a North Carolina Legal Elite, Best Lawyers in America, AV Peer Rated by Martindale-Hubbell and a North Carolina Super Lawyer.

▶ He is the Chair of Shumaker’s Bankruptcy, Insolvency and Creditors’ Rights Practice; the Chair of Shumaker’s Global and Cross-Border Insolvency Practice; the Co-Chair of Shumaker’s Marketing Committee; and the past Managing Partner of Shumaker’s Charlotte office, 2002-2011.

▶ David’s experience is primarily Bankruptcy and Insolvency and also International Sales, Transactions and Disputes, Business Litigation, Commercial and Corporate Transactions Business.

▶  

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Panelist: Patricia Cristina Medeiros

▶ Brazilian attorney of the University of Sao Paulo, with Specialization in Tax and Business Law

▶ Completing LLM in International Business Law in the University of California, Davis School of Law

▶ Experience as in-house counsel: •Andersen Consulting Legal Brazil• Ciba-Geigy•Siemens•Bearing Point•Vivo•Imbraparsul•Syngenta, with major achievement structuring an agribusiness credit instrument in Brazil

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Panelist: Luis Omar Guerrero Rodríguez

▶ Mr. Guerrero received his law degree from the Universidad Iberoamericana, León Campus (1987-1991), and obtained an LLM at the London School of Economics and Political Science (1996-1997). 

He completed postgraduate degrees on “Régimen Jurídico de los Negocios Internacionales en México” (Legal Framework for International Business in Mexico) and Commercial Law at the Escuela Libre de Derecho (1993-1994 / 1994-1995). He also secured two additional diplomas in ICC ELD arbitration and also in Constitutional lawsuits (amparos) at the Barra Mexicana Colegio de Abogados (2006-2007).

▶ He has excelled in areas of Litigation (mainly Commercial, Reorganization and Bankruptcy and Administrative); Commercial Arbitration and Economic Competition- Antitrust Law.

Panelist: Rafael Castillo-Triana

▶ International Attorney raised and educated in Colombia▶ Former CEO and COO of financial institutions in Colombia▶ Regional Counsel for several financial institutions doing

business in Latin America, including CIT Group, Inc. and Cisco Systems Capital Corporation

▶ Diplomatic Representative of the Republic of Colombia at the 1988 Ottawa Diplomatic Conference that adopted the UNIDROIT Conventions on International Leasing and on International Factoring

▶ Consultant to the Central Bank of El Salvador, in drafting the El Salvador Leasing Law, 1998

▶ Consultant to the International Finance Corporation in the field of Asset Based-Equipment Financing Law for: Nicaragua, Honduras, Madagascar, Tanzania, Ghana, Cameroon, Rwanda, Jordan, Yemen, West Bank and Gaza, and Lesotho;

▶ Consultant to the Kenya Ministry of Finance- Drafting Leasing Law

▶ Consultant retained by the USAID for the government of the former Soviet Republic of Georgia

▶ CEO of FTAA Consulting, Inc. and The Alta Group Latin American Region LLC

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About Rafael’s firm

▶ Drawing in a tradition of 75 years, F.T.A.A. Consulting became leader in the provision of investors and creditors rights protection and solutions in Latin America;

▶ Our affiliation with The Alta Group, the world’s largest consultant focused in equipment leasing and financing dates back 17 years and tested our combination of legal management strength with business acumen;

▶ These are some of the key clients that have enjoyed of our services:

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▶ Open Accounts: Must you be afraid of them?

▶ Best practices in dealing with open accounts in Latin America

▶ What is going on in the marketplace?

Main Issues

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▶ What can go wrong?• Customer defaults

Shall you be afraid of Open Accounts in Latin America?

To trust or not trust in your client?

• Customer becomes insolvent

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▶ What is your risk approach?

Risk

High Definition

Do you avoid challenging risks? …or, do you embrace risk, get to understand the different color pixels and seek how to mitigate?

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What are the rewards you are looking after?

Incremental sales

Profitability

Shorten D.S.O.

Minimum to null credit losses

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Best Practices for Open Accounts

▶ Due diligence:•Check Character•Check Capacity•Check Collateral•Check Legal Framework•Check Market Practices

Focus on good documentation: Invoice Additional contracts Instruments: promissory notes, drafts, etc. Perfect securities if you can Foreign exchange issues

13©The Alta Group 2014

What is going on in Latin America today?

Legal and Economic Realities

14©The Alta Group 2014

Brazil

Case Study

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Common Issues

Fluctuation of Interest Rate Risks

Fluctuation of Foreign Currency Risk

Brazilian Market

The same as in other jurisdictions, but with a few particular features.

Regulators: BACEN, CVM, Cetip (self-regulation) and BM&FBovespa (self-regulation).

Based on transparency and systemic risk management.

Trade environments

> Stock exchange and OTC

Prior approval by CVM for all derivatives contracts (new & standard)

Derivatives

Current Regulatory Requirements

Registration is mandatory for all derivatives contracts (OTC & Exchange-Listed).

> Registration, settlement and netting (CETIP or Clearing BM&FBovespa)

> Local and international transactions

> Limited types of derivatives can be registered

> Timing for registration

Daily detailed reporting to BACEN and CVM.

Derivatives

Syngenta’s participation in agribusiness securities

Certificate of Agribusiness Receivables (“CRA”)

A registered security instrument, openly traded in the Brazilian capital market, backed by agribusiness credit rights and issued by securitization companies.

> Investment option to one’s fixed income portfolio

> Income tax exemption for individual investors

Recent participation of Syngenta in CRA offerings:

> as administrative agent in Octante Securitizadora, 1st issuance, 1st series (BRL85,500,000) as of August 2012.

> as administrative agent in Octante Securitizadora, 1st issuance, 9th series (BRL83,750,000) as of September 2013.

> as corporate guarantor in Octante Securitizadora,1st issuance, 10th series (BRL90,000,000) as of January, 2014.

Syngenta’s participation in agribusiness securities

Syngenta’s Activities

While acting as Administrative Agent, Syngenta is formally responsible for the overall process related to the creation and monitoring of agribusiness credit rights that served as basis (lastro) for the CRA.

While acting as Corporate Guarantor, Syngenta formally acts as responsible for the payment of certain agribusiness instruments that back the CRA, in case of its default (usually as a “second loss” guarantor and limited to a certain amount).

Syngenta’s additional activities in CRA issuances involve:

> gathering participants to act either as debtors of agribusiness instruments or as investors of the CRA

> assisting the CRA issuer to engage insurance companies for the coverage of an eventual CRA default

20©The Alta Group 2014

Mexico

Key Issues

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Economic and political climate in Mexico

▶ Political issues▶ Industry analysis▶ Economic Reform▶ Laws impacting business▶ Banking system▶ Trading partners▶ “Hot” and “Not”

industries▶ Open account sales▶ Collateral security▶ Other comments

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Legal Realities

▶ Legal environment improved in:•Honduras•Colombia•El Salvador•Chile•Peru•Guatemala•Mexico•Costa Rica•Panama•Guyana•Dominican Republic

Why? Because they adopted recent legal statutes improving: • Enforceability of invoices• Security interests• Creditors rights in insolvency

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Short Cash-to-Cash Cycles (DSO)

Banking System

Foreign Exchange Controls

Current Receivab

les

Rule of Law + Efficiency of Courts + Low Corruption

Bank System + Foreign Exchange Controls Delinquent

Receivables

Two Scenarios:

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Rule of Law

▶ Are your receivables enforceable in the country of your debtor?

▶ Does the country have an effective Law regulating security interests/rights as effective collateral?

▶ Are secured creditors duly protected in cases of debtor’s insolvency?

▶ What could be the expectations for unsecured creditors?

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Champions of Rule of Law

▶ Security Interest Laws:

PERUHONDURAS

MexicoGuatemalaHondurasColombia

Peru

BrazilChile

ArgentinaPanama

Costa RicaNicaragua

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Efficiency of the Courts

Best:MexicoNicaraguaPeruBahamasDominican RepublicChile Worst:

SurinameGuatemalaTrinidad and TobagoColombiaHondurasBelizeCosta RicaEl SalvadorBrazil

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Potential for credit losses- Insolvency protection

Best:BelizeJamaicaColombiaBarbadosBoliviaMexicoUruguaySt. LuciaNicaraguaPanamaPuerto Rico (U.S.)

Worst:GrenadaHaitiSt. Kitts and NevisSt. Vincent & GrenadinesEcuadorSurinameBrazilDominicaVenezuela, RBParaguayHondurasDominican RepublicEl Salvador