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Argent In The News

November 01, 2010 by Argent Trading

Interview with Rafael Corral, CEO Argent, originally printed in The Diplomat.

Argent Trading pioneers a new system of trading assets in Romania

International U.S based trading firm Argent Trading is targeting banks, manufacturing and retail in Romania to maximize local companies’ distressed assets. The firm provides companies with additional liquidity, when the access to credits is limited and restoring the value of assets that are distressed because the market value of the asset has fallen below either the cost or the book value on the balance sheet.

Rafael Corral, President & CEO of Argent Trading answers questions on the company’s strategy:

Why have you decided to come to Romania?

Romania is one of the largest countries in Europe and will be a growing economy, with a lot of potential in terms of companies and business. We have an office in Greece and want to develop across all eastern Europe. We started in Romania, because of the quality of the team prepared to develop the business here. Probably, we will go to Poland and the Czech Republic.

How did you approach your clients?

We ask companies if they have any assets that are a problem, such as excess inventory or capacity. Once we have established a business with certain companies, this success is spread through word of mouth – where companies talk to one another saying - ‘I had this problem and Argent helped me solve it’.

Which sectors are of interest to you in Romania?

We are interested in working with banks because, right now, they have a lot of [distressed] assets. This is a very good client for us: they have the assets and they have the expenditures to do the trading process. Also we target manufacture and retail.

To what extent is the company interested in real estate?

As a global strategy, we buy more apartments and buildings. Regarding industrial properties, instead of buying, we help our clients sell the property by allowing the client to sell it for them at market value. For example, when a company wants to sell land or industrial property of this kind for four million Euro, but it is stuck because the market only pays three million Euro, they don’t want to lose so much. Therefore, in order for the company to succeed, we will offer two million Euro in cash and another two million Euro in Asset Purchase Credits (APCs) - the proprietary credit currency of Argent Trading. So they recover the four million Euro. Then we get one million Euro for the two million that we gave in our currency. The buyer is going to pay three million and the seller, our client, is going to recover four million, which was the cost they wanted to recover. Everybody is happy because the client does not want to lose money and the buyer pays the market value.

What happens if the company cannot afford to spend so much to cover all the credits in the long term?

They have to convert all trading currency into cash. The only way to do this is by not paying the supplier. Because they are going to buy something at the end, we work together with our client and decide how they can convert the currency. We will buy one million Euro from a company if it has at least 15 million Euro in sales. We require the company to have a buying power strong enough to recover the inventory. The time frame is three years to recover the credits, but we can extend it by another year or two years.

When you explain to a client the product for the first time what are they most concerned about?

The first concern is what are we going to do with their product. The client does not want to have their brand name affected. We are not going to sell their products on markets where the brand will suffer. We put all these restrictions in the contract. The second concern is how are they going to monetize the currency and to what extent the suppliers are going to accept to negotiate the credits and - naturally - how are they going to recover the money.

How willingly do local companies accept the challenge of going international?

Some of them are happy that they have gotten rid of the problem with the inventory and do not continue exploiting new opportunities - it depends on the capacity of the company. In the case of local companies, I will say that 60 per cent remain in the market and 40 per cent will continue to expand the business to other markets. Also, it depends on where we sell the products. We negotiate in potential markets where the client is interested. If we sell the Romanian products to the Czech Republic, maybe the local company will be interested in continuing the business. But if we agree to sell the products to South Africa, this will not be the case anymore.

In what areas are European companies most interested in spending their credits?

Normally in packaging, printing, transport, marketing materials and raw materials. Also, capital equipment is a very good category, which allows for the largest percentage of credit use.

Argent Trading Romania
10-12 Pantelimon Street, The Tower
Building, 3rd floor, Bucharest 2, Romania
T: +40 212 047 611
F: +40 212 047 609
www.ArgentTrading.com