As 2020 got under way, the treasury team at ice cream maker Froneri comprised head of treasury John Meehan and treasury analyst Benjamin Bennett, operating a centralised, in-house banking model across 24 countries in six continents. It wasn’t until December that the hiring of a graduate treasury assistant brought numbers up to a grand total of three. In between, the team had crunched through a packed agenda of tasks across four critical areas:
1. Corporate finance
Here, the team led and completed a €5.8bn financing deal for the acquisition of Nestle’s US ice cream business and refinanced €1.8bn of debt.
2. Cash management
In adding France, Germany, Italy and Spain to the company’s euro-based, zero-balancing cash pool, the team brought in €100m of extra liquidity. Treasury also implemented a multicurrency cash pool bringing in an additional €120m, including cash previously trapped.
3. Operations
In a benchmarking exercise carried out with the help of KPMG, the team completed a treasury management system (TMS) request for proposal. Froneri signed off a €1m, five-year investment plan, encompassing a TMS implementation and an additional team member.
4. Risk management
In this work stream, the team executed $835m worth of cross-currency interest-rate swaps, providing a set of net investment hedges for Froneri’s GBP and AUD assets. The team calculated that the initiative would produce annual savings of €8m, compared to the option of issuing term loans in those currencies. The team also added four banks to the company’s FX hedging platform.
Early on in the pandemic, the team identified that liquidity would be key to ensuring the firm’s stability. Throughout the year, the team tackled complex treasury projects, delivering significant value to the business.
“They have achieved so much for two people. The most important asset for a treasury team to have is a holistic approach – keeping a range of activities going at once. This team’s performance certainly emphasised that.”
With COVID-19 erupting in Burberry’s largest market, China, and spreading to Italy, home to the firm’s largest distribution hub, the fashion brand’s treasury team was pivotal. The team arranged £600m of finance through the COVID Corporate Financing Facility, despite being unrated at the time, a feat that involved securing bank confirmation of implied ratings.
In addition, it drew down the brand’s revolving credit facility in full, obtained a covenant waiver and one-year extension, and issued the company’s first-ever bond, complete with an environmental, social and governance badge: a first for the luxury sector.