JSA Advocates & Solicitors has lent its expertise to the Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO) concerning its investment in Sahyadri Farmers Producer Company Limited’s private placement of secured, senior, unlisted, redeemable, and non-convertible debentures (NCDs). This strategic financial maneuver was orchestrated by the adept JSA Finance team, spearheaded by Partner Soumitra Majumdar, with valuable contributions from Partner Shrijita Bhattacharya and Counsel Shekhar Shrivastava.
Innovative Structuring for Agricultural Financing
The transaction was notable for its innovative design of a security and cashflow framework tailored to an agricultural financing program. Unlike conventional financing arrangements that rely on project or corporate cashflows, this program’s primary repayment source stems from loans provided by Sahyadri to farmers through its Farmer Credit Program.
One of the critical challenges in this transaction was devising a robust and enforceable security package. This package needed to effectively secure FMO’s interests over the downstream loan receivables while maintaining the lending program’s commercial viability. The solution involved comprehensive structuring and negotiation, ensuring an enforceable security architecture. This included an agreement between Sahyadri and its borrowers to facilitate the assignment of receivables, control over collections, and a suitable enforcement mechanism.
Balancing International and Local Needs
The transaction required careful balancing of FMO’s commercial requirements as an international development finance institution with the practical realities of operating an agricultural lending program. The proceeds from the NCD issuance were channeled towards financing eligible borrowers under Sahyadri’s Farmer Credit Program and refinancing part of the company’s existing debt.
This investment underscores the complexities involved in aligning international financial practices with local agricultural financing needs, showcasing JSA’s capability in navigating these intricate transactions.
