Borrower Overview
TriLinc provides financing for small and medium size enterprises (“SMEs”) primarily in developing economies, that provide the opportunity to achieve both competitive financial returns and positive measurable impact. TriLinc has provided a loan to a sugar producer operating in the northeastern Brazilian state of Pernambuco, enabling it to plant and fertilize its sugar cane crop and improve milling operations. The borrower also anticipates that the TriLinc financing will increase the capacity of its employees through job skills training and specialization courses. The company has an established operating history with large international buyers such as Sucden, American Sugar Refining and Agrograin (subsidiary of Archer Daniels Midland Company). The loan is secured by a senior secured interest over the company’s sugar cane production, which is inspected on a routine basis by an independent collateral management company, as well as by an assignment of the cash proceeds from the corresponding crop sales contract. The borrower, which has been in business since 1958 and has worked with the Brazilian representatives of TriLinc’s Investment Partner since 2009, is a vital provider of employment in a region of Brazil that has a poverty rate that is double the national average.1 Beyond employment and training, the company provides over 250 houses to employees rent free, free medical services to employees and their families, and a building free of rent and maintenance costs for a local school.
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Market Overview
Brazil, classified as a middle income country by the World Bank, has been a major part of the emerging market growth story in the last decade.2 Brazil has experienced solid growth since 2004, averaging nearly 3.9% annual GDP growth through 2012.2 The largest economy in Latin America, and the second largest in the Western Hemisphere behind the United States, Brazil has a diverse economy with large and well-developed agricultural, mining, manufacturing and service sectors.2
Brazil meets TriLinc’s country standards for its performance across relevant growth, stability and access metrics.3 Brazil’s diverse economy serves both its domestic market of over 200 million citizens as well as a healthy export market that counts China and the United States as its main trading partners. Both S&P and Moody’s rate Brazil’s sovereign debt as investment grade.
Additional Sustainability & Impact Highlights
- The borrower pays wages that are higher than the local average, and provides financial support to a local medical entity that provides complete health care to children, women and men in Pernambuco
- The borrower cooperates with IBAMA (Brazilian Institute of Environment and Natural Resources) to reforest their region, to date having planted 19.83 hectares of trees.
- The company is licensed by the CPRH (State Agency of Environment), which carries out environmental monitoring of licensees and the regulation, protection, conservation and recovery of natural resources in the state of Pernambuco
- According to the International Finance Corporation, “Brazil has a wide range of federal and state laws regarding environmental protection, aimed at combining social and economic development with environmental preservation, with which the sugarcane business needs to comply.”5
1http://www.worldbank.org/en/news/press-release/2013/06/25/wb-brazil-pernambucos-new-inclusive-growth-program-will-benefit-nine-millionresidents 2World Bank World Development Indicator Database, 2013 3There is no assurance that our investment in this company or this market will be successful 4IFC Good Management Practices Manual for the Cane Sugar Industry, page 520
The above information is as of the initial date of investment: December 6, 2013. In certain limited situations as needed, TriLinc directly manages an investment formerly managed by a former Investment Partner.
RISK FACTORS
There is no guarantee that TriLinc’s investment strategy will be successful. Investment in a non-listed LLC involves significant risks including but not limited to: ownership is restricted; no secondary market; limitation on liquidity, transfer and redemption of ownership interest; distributions made may not come from income and, if so, will reduce the returns, are not guaranteed and are subject to management discretion. TriLinc selects investments and conducts operations on behalf of its clients, and will face conflicts of interest. Investment with TriLinc is not suitable for all investors. Securities Offered through CommonGood Securities, LLC, a member of FINRA and SIPC.
An investment with TriLinc carries significant fees and charges that will have an impact on investment returns. Information regarding the terms of the investment is available by contacting TriLinc. This is a speculative security and, as such, involves a high degree of risk. Investments are not bank guaranteed, not FDIC insured and may lose value or total value. Some investments may have been made in an investment vehicle that is no longer open for investment. The highlighted investment may or may not have been profitable. There is no guarantee that future investments will be similar.
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