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Post by Franko10 ™ on Mar 25, 2005 14:56:49 GMT -5
Cool,.. nice find
Citigroup's Involvement in Wood Products, Oil, and Mining
Citibank's Forest Products Division (based in Helsinki, Finland, with offices in New York, Stockholm, Toronto and in other countries with strong pulp and paper industries) and Energy/Mining Division (based in New York, with offices in London, Houston) offers financial services (in other words, debt) to corporations around the world.
Citibank's head of global structured finance in the U.S. and its head of global forest products for Citibank in Finland wrote an article urging their clients not to get left behind in the wave of industry mergers, but to compete successfully in globalization, which provides endless opportunities for growth and expansion. Paper companies should "develop a global presence and scale that allows businesses to market a range of products in various geographic regions. As a group's cost of capital comes down, the company will find it easier to extend its competitive advantage and improve financial performance. This will attract a broader and deeper investor base, which will drive the cost of capital lower still, starting the process all over again." "In this world, only the strong will survive, but the question is how to become one of the rich and strong." Part of successful competition in this environment is the need to "develop low cost operations and economies of scale [and to] develop and manage an efficient combination of raw material base and manufacturing facilities." "Companies are going to have to convince the marketplace that they are responsible corporate citizens, otherwise projects will become that much harder." The authors note that "Citibank pioneered asset-backed securitization 15 years ago" and encourage potential clients to choose Citibank financing. (See the section below on Maxxam for the results of Citibank's pioneering use of forests as assets).
Many examples of Citibank financing of wood products, oil, and mining projects are detailed in Part 3. A few examples will be introduced here to suggest the variety and complexity of the financial arrangements.
An example of financial services involving forests is Citibank's recent syndication of a $275 million loan to Rayonier Timberlands for its acquisition of 980,000 acres in the Southeastern U.S. from Smurfit-Stone Container Corporation. Rayonier owns more than two million acres of land in the U.S. and in New Zealand.
Hedging has been created to help corporations and their investors to avoid the traditional cyclical swings associated with the paper industry's overcapacity.
"U.S. pulp and paper producers and consumers, buffeted in recent years by extreme price volatility, are taking advantage of hedging tools being offered by a small number of companies. Enron Capital & Trade Resources... International Forest Products Corp., and Citibank... are offering customized swap agreements which allow buyers and sellers of pulp and paper products to offset some of their price risk. Enron and Citibank have been marketing their contracts for about two years, but there has been a surge of interest in recent weeks. The typical hedging contract is based on a standard swap contract, as issued by the International Swap Dealers Association. For example, a paper consumer contracts to pay the arranging company Enron, International Forest Products, or Citibank -- a set price for a particular paper product. The contract is purely financial, with no paper changing hands. Payments are then exchanged quarterly. If the market price, based on an agreed price index, exceeds the set price, the arranger pays the paper consumer the difference, whereas if the market price is below the set price, the consumer pays the arranger the difference. The most popular term for swap agreements in pulp and paper is five years; Times Mirror agreed to an agreement of that length. "We wanted to make sure that the period of the contract is long enough that we will roll through at least one or two cycles," Mr. Schoch said."
A more traditional financial relationship is for Citigroup subsidiaries to own stock in various corporations. According to documents filed with the U.S. Securities & Exchange Commission, Citigroup Investments holds shares in 3,148 corporations, some of which have been condemned for their environmental practices, including Abitibi Consolidated, Alcan Aluminum, Alcoa, Amcor, Anglo American, Anglogold, Arch Coal, Ashanti Goldfields, Ashland, Asia Pulp & Paper, Atlantic Richfield, Battle Mountain Gold, Boise Cascade, Bowater, Champion International, Chevron, Chiquita, Conoco, Delta & Pine Land, Domtar, Du Pont, Echo Bay Mines, Enron, Fletcher Challenge Forests, Fluor, Georgia Pacific, Gold Fields Ltd, Gulf Canada Resources, Gulf Indonesia Resources, Hansmall thingy Holding, Hecla Mining, Home Depot, Homebase, International Paper, Kaiser Aluminum, Kerr Mcgee, Louisiana Pacific, Maxxam, Newmont Mining, Phelps Dodge, Placer Dome, Pope & Talbot, Potlatch, Rayonier, Royal Dutch Petroleum, Smurfit Stone Container, Total Fina, Union Carbide, Waste Management, Westvaco, Weyerhaeuser, Willamette Industries.
Some of this stock is actually directly by Citigroup, and some of it is owned "beneficially" for other shareholders.
Citigroup's Involvement in Wood Products, Oil, and Mining
Citibank's Forest Products Division (based in Helsinki, Finland, with offices in New York, Stockholm, Toronto and in other countries with strong pulp and paper industries) and Energy/Mining Division (based in New York, with offices in London, Houston) offers financial services (in other words, debt) to corporations around the world.
Citibank's head of global structured finance in the U.S. and its head of global forest products for Citibank in Finland wrote an article urging their clients not to get left behind in the wave of industry mergers, but to compete successfully in globalization, which provides endless opportunities for growth and expansion. Paper companies should "develop a global presence and scale that allows businesses to market a range of products in various geographic regions. As a group's cost of capital comes down, the company will find it easier to extend its competitive advantage and improve financial performance. This will attract a broader and deeper investor base, which will drive the cost of capital lower still, starting the process all over again." "In this world, only the strong will survive, but the question is how to become one of the rich and strong." Part of successful competition in this environment is the need to "develop low cost operations and economies of scale [and to] develop and manage an efficient combination of raw material base and manufacturing facilities." "Companies are going to have to convince the marketplace that they are responsible corporate citizens, otherwise projects will become that much harder." The authors note that "Citibank pioneered asset-backed securitization 15 years ago" and encourage potential clients to choose Citibank financing. (See the section below on Maxxam for the results of Citibank's pioneering use of forests as assets).
Many examples of Citibank financing of wood products, oil, and mining projects are detailed in Part 3. A few examples will be introduced here to suggest the variety and complexity of the financial arrangements.
An example of financial services involving forests is Citibank's recent syndication of a $275 million loan to Rayonier Timberlands for its acquisition of 980,000 acres in the Southeastern U.S. from Smurfit-Stone Container Corporation. Rayonier owns more than two million acres of land in the U.S. and in New Zealand.
Hedging has been created to help corporations and their investors to avoid the traditional cyclical swings associated with the paper industry's overcapacity.
"U.S. pulp and paper producers and consumers, buffeted in recent years by extreme price volatility, are taking advantage of hedging tools being offered by a small number of companies. Enron Capital & Trade Resources... International Forest Products Corp., and Citibank... are offering customized swap agreements which allow buyers and sellers of pulp and paper products to offset some of their price risk. Enron and Citibank have been marketing their contracts for about two years, but there has been a surge of interest in recent weeks. The typical hedging contract is based on a standard swap contract, as issued by the International Swap Dealers Association. For example, a paper consumer contracts to pay the arranging company Enron, International Forest Products, or Citibank -- a set price for a particular paper product. The contract is purely financial, with no paper changing hands. Payments are then exchanged quarterly. If the market price, based on an agreed price index, exceeds the set price, the arranger pays the paper consumer the difference, whereas if the market price is below the set price, the consumer pays the arranger the difference. The most popular term for swap agreements in pulp and paper is five years; Times Mirror agreed to an agreement of that length. "We wanted to make sure that the period of the contract is long enough that we will roll through at least one or two cycles," Mr. Schoch said."
A more traditional financial relationship is for Citigroup subsidiaries to own stock in various corporations. According to documents filed with the U.S. Securities & Exchange Commission, Citigroup Investments holds shares in 3,148 corporations, some of which have been condemned for their environmental practices, including Abitibi Consolidated, Alcan Aluminum, Alcoa, Amcor, Anglo American, Anglogold, Arch Coal, Ashanti Goldfields, Ashland, Asia Pulp & Paper, Atlantic Richfield, Battle Mountain Gold, Boise Cascade, Bowater, Champion International, Chevron, Chiquita, Conoco, Delta & Pine Land, Domtar, Du Pont, Echo Bay Mines, Enron, Fletcher Challenge Forests, Fluor, Georgia Pacific, Gold Fields Ltd, Gulf Canada Resources, Gulf Indonesia Resources, Hansmall thingy Holding, Hecla Mining, Home Depot, Homebase, International Paper, Kaiser Aluminum, Kerr Mcgee, Louisiana Pacific, Maxxam, Newmont Mining, Phelps Dodge, Placer Dome, Pope & Talbot, Potlatch, Rayonier, Royal Dutch Petroleum, Smurfit Stone Container, Total Fina, Union Carbide, Waste Management, Westvaco, Weyerhaeuser, Willamette Industries.
Some of this stock is actually directly by Citigroup, and some of it is owned "beneficially" for other shareholders.
