Cedar Oxygen signs their first trade financing transaction in Lebanon.

Deployment is ‘a crucial first step in addressing the world’s most critical impact investment opportunity’

Context

Following the official announcement about the launch of Cedar Oxygen (Cedar O2) initiative, the Lebanese Roasting Group’s management has contacted us and explained the challenges they are facing in terms of limited access to raw materials, due to high costs for imports.

After successfully completing the credit application via Cedar O2’s digitalized onboarding platform, and getting the green light from the Paris based Investment & Credit Committee, Cedar Oxygen and the Lebanese Roasting Group have signed their first financing transaction end of 2020.  

This deployment is a crucial milestone towards Cedar Oxygen providing short-term financing solutions to Lebanese borrowers, in partnership with the Association of Lebanese Industrialists.

It is also digitalizing trade finance and delivering a “real economy” credit offering for Lebanese borrowers and a much-needed roadmap for the next few years of inclusive finance.  It is the first of its kind in Lebanon.

 Alexandre J. Harkous, Chairman & Managing Partner of Cedar Oxygen, said: This deployment is a crucial first step in addressing the world’s most critical impact investment opportunity and in revitalising the Lebanese economy, one company at a time.  Providing trade finance solutions will help manufacturers to trade their way out of the economic crisis and reduce the country’s dependence on short-term aid.

Challenge

Currently a shortage of dollars is making it difficult and unsustainable to import any raw materials and allow life in Lebanon to get back to normal. The Lebanese economy is heavily dependent on international trade, and Cedar Oxygen aims to provide the trade finance facilities that will power its economic regeneration.

The Lebanese Roasting Group Overview

The Company is a major market player in the industry of snack food, nuts, and coffee.

The value chain includes the following steps:

  • Import of raw nuts and coffee,
  • Processing of the raw products,
  • Packaging and selling under both brand names via a worldwide distribution network and recover to its standard production level.

Peter Daniel, Chief Executive Officer of Lebanese Roasting Group, said: “Thanks to the professionalism and perseverance of Cedar Oxygen and the trade financing facilities provided, we are able to pass through the difficult situation in Lebanon , keeping our supply chain flowing, from import to production to export: leading to sustaining the business , safeguarding our workforce and maintaining Castania as Lebanon’s favourite and affordable snack.”

Solution

Transaction Profile

By providing supply chain finance facility for export sales, Cedar Oxygen’s Platform will enable the company to match its normal level of imports & exports and recover to its standard production level.

How can Cedar Oxygen be part of the solution?

This is the first in an occasional series of interviews with Wissam Ghorra, Business Development manager at Cedar Oxygen, supporting inclusive finance during these challenging times.

How has this crisis shifted the perception of crisis response finance, if at all?

Now more than ever, support to the industrial sector is critical for economic recovery. Providing liquidity is our main target, with an explicit focus on supporting the industrial sector.

Who is eligible for Cedar Oxygen facilities?

Every Lebanese industrialist wishing to finance his import of raw materials and settle the amount either from sales in the Lebanese market or exports, is eligible to Cedar Oxygen facilities.

How does Cedar Oxygen facilities help the industrialists scale up their production?

Due to all the difficulties industrialists are facing in providing fresh funds for the import of raw materials, many companies are not operating at full capacity and are missing the chance of satisfying all their clients’ needs. They are being obliged to prioritize some clients over others or rationalize their sales per client. With Cedar Oxygen you can operate at full capacity and handle all the requests coming from all your customers.

Does having access to facilities outside Lebanon help Lebanese producers gain a competitive advantage on the export market?

Having access to facilities abroad with the appropriate conditions will open a window for Lebanese industrialists to be more competitive and raise the flag of the “Made in Lebanon” worldwide. This is a real opportunity for industrialists to explore new markets and expand their clients database all over the world. 

What is the added value of working with Cedar Oxygen with regards to building a track record with international institutions?

Operating under Luxembourg jurisdiction, Cedar Oxygen will facilitate building a track record with international financing institutions and will allow, at a later stage, clients to have access to facilities in Europe and diversifying the concentration risk of dealing solely with Lebanese banks.