Building capital discipline - Nadine Aerts, CFO PoAB — Transcript

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1. 0:04Welcome to the very first episode of
2. 0:06the Cel Playbook. In this new format
3. 0:08from Cel Studios, we’re going one
4. 0:10level deeper than the Cel podcast. We
5. 0:13take one concrete decision, one
6. 0:15practical case, to learn how a top CFO
7. 0:18thinks, structures, and decides. Today,
8. 0:21I am sitting with Nadine Aard, CFO of
9. 0:23Port of Antwerp-Bruges. The topic. How
10. 0:26do you, as a CFO, negotiate a credit
11. 0:28line of a staggering € 500 million?
12. 0:31That sounds technical, but in reality,
13. 0:33it is about much more than financing.
14. 0:37It is about preparation, trust,
15. 0:39internal alignment, and financial
16. 0:41strength. But more importantly, it is
17. 0:46about how you create enough room to
18. 0:48make the future of your organization
19. 0:49possible. Nadine, welcome to the Cel
20. 0:53Playbook. I always start with the same
21. 0:55question for those who don’t know you
22. 0:57yet. Who is Nadine?
23. 0:59I am the CFO of the Port of
24. 1:01Antwerp-Bruges. For about a year now.
25. 1:04Exactly one year. But before that, I
26. 1:07had a very long career at SD Worx,
27. 1:10including the last seven years as the
28. 1:12group's CFO.
29. 1:13Okay, fantastic. We are sitting here at
30. 1:16the table, of course, to talk about a
31. 1:18very important case. You recently
32. 1:21managed to secure a credit line of, if
33. 1:23I’m not mistaken, € 500 million
34. 1:25from the market. And I want to talk to
35. 1:29you, as CFO, about that. How did you
36. 1:31prepare for it? Because I think that is
37. 1:33particularly interesting for many CFOs
38. 1:35and finance leaders. Could we perhaps
39. 1:37discuss that? Why was it actually
40. 1:39necessary to do that? Yes, well, I
41. 1:43mentioned our Capex, our large
42. 1:45investments, during the CFO podcast
43. 1:47earlier—which, until a few years ago,
44. 1:50were fairly constant, around € 100
45. 1:52million per year. But we have seen that
46. 1:58steadily rising in recent years, and we
47. 2:00are now facing an investment wave of
48. 2:02several hundred million per year. We
49. 2:06are going
50. 2:07What are we talking about? Well, this
51. 2:09year it will be a good € 300 million,
52. 2:11but in the coming years, it will be €
53. 2:14400 million, € 500 million; it’s
54. 2:17going to hit nearly € 600 million.
55. 2:21Back when it was € 100 million, we
56. 2:23had a constant cash position of about
57. 2:25half a billion. But we saw that shrink
58. 2:28significantly over the last few years.
59. 2:33And when I started, just a year ago, at
60. 2:35the end of August last year, we saw
61. 2:37that if we continued at this rate, as
62. 2:40planned in the multi-year plan, we
63. 2:42would hit a zero cash position by early
64. 2:442027. So at that moment, and I'm
65. 2:49talking about September or October '25,
66. 2:52we started the process of preparing for
67. 2:54how we were going to tackle that
68. 2:56mountain of debt coming our way. Yes,
69. 2:58how are we going to master that?
70. 3:00Yes, why not choose a recapitalization
71. 3:03or a capital increase? Or was that not
72. 3:06an option?
73. 3:06That was not an option at the time. Um,
74. 3:09besides, we don't really have debts yet
75. 3:11. Back in the day, a debt was taken on
76. 3:14for the sea lock. And well, every
77. 3:17healthy company has some form of debt,
78. 3:19right? You don't do everything with
79. 3:22your own equity.
80. 3:23No, very clear. Now, I am very curious,
81. 3:25how did that actually go? What was the
82. 3:27preparation like? Yes.
83. 3:29Yes, um, this actually shows that while
84. 3:31it starts with a financing question, it
85. 3:33actually goes much broader than that.
86. 3:35It's actually about your entire
87. 3:36organization and you have to present a
88. 3:39single, unified story. It's not just
89. 3:41about finance, but it does start from
90. 3:43the financing question, right? So we
91. 3:46started by breaking it down into four
92. 3:48topics. The first topic, the short-term
93. 3:53financing, the credit line we are now
94. 3:55looking into more deeply. But there
95. 3:59were three other topics we also wanted
96. 4:00to address regarding the long-term
97. 4:02financing we are looking ahead to.
98. 4:05Two smaller ones: conducting research
99. 4:07into a credit rating. Suppose we were
100. 4:10to get an official credit rating. What
101. 4:12would the outcome be? And also,
102. 4:14research into whether it is desirable
103. 4:16for us to move towards IFRS investments
104. 4:18, right, credit.
105. 4:19Absolutely. Yes, absolutely. But
106. 4:22especially in the context of that
107. 4:24long-term financing, we noticed there
108. 4:26are a number of instruments that are
109. 4:28more easily accessible with a credit
110. 4:29rating and IFRS.
111. 4:32So that is that first step. Um, the
112. 4:35second thing we spent a lot of time on,
113. 4:37I think, is bringing your stakeholders
114. 4:39on board. Because this is completely
115. 4:42new for this organization. So we did
116. 4:46invest in telling the story several
117. 4:48times to the audit committee, and also
118. 4:50to the board of directors, explaining
119. 4:52the necessity. Why is this necessary?
120. 4:55Uh, so outlining our financial context
121. 4:57a bit, why that has changed. So why
122. 5:00this topic is suddenly on the table now
123. 5:02. We also set up a task force that met
124. 5:06regularly to review every step.
125. 5:09Yes. That is still quite internal. That
126. 5:13is still about that financing question.
127. 5:16But that must ultimately lead to one
128. 5:17single story. We prepared a financial
129. 5:21memo in which the financial plan is
130. 5:23laid out. So, you have a solid story.
131. 5:27But more than that. It really speaks to
132. 5:29the entire strategy as well. And that
133. 5:31needs to become a storyline.
134. 5:33Yes. And what is also important
135. 5:35regarding, well, the whole financing
136. 5:37narrative toward the organization and
137. 5:39the outside world, is that it fits into
138. 5:42a strategy, right? So, like I just said
139. 5:44, why are we doing this? We have a
140. 5:47rising investment wave coming our way.
141. 5:50So that is the reason we need to fund
142. 5:52our investments in other ways too.
143. 5:55Yes, I do have a question; in our CFO
144. 5:57podcast, we talked about a capex of 5
145. 6:00billion for the next 12 years, if I'm
146. 6:02not mistaken.
147. 6:04This is a credit line of 500 million.
148. 6:07How are you actually going to balance
149. 6:09those with each other? Or is there a
150. 6:11possibility that you will generate even
151. 6:13more cash? Exactly. So, I said there
152. 6:15are four steps we've taken so far. Step
153. 6:18one: short-term financing, which is the
154. 6:20credit line.
155. 6:21Step two: long-term financing. We are
156. 6:24currently working fully on that as well
157. 6:26. Um, we've gone through a whole
158. 6:28process for that which is actually
159. 6:30quite similar to the process I'll speak
160. 6:32about in a moment. But that is about
161. 6:35appointing a financial advisor. In this
162. 6:38case, that became Rabobank. They will
163. 6:43help us determine, based on the
164. 6:44investments we are going to make and
165. 6:46the evolution of our EBITDA in our
166. 6:48multi-year plan, what are the financial
167. 6:49instruments that you ideally set up in
168. 6:51the coming years. So, that is a process
169. 6:56currently underway.
170. 6:57So we are really talking about the
171. 6:58short-term story here. This is it. Okay
172. 7:01. No, for me, that's clear. So
173. 7:03ultimately, that 500 million is about a
174. 7:06short-term need, and then you'll
175. 7:08naturally, in step two, I assume, move
176. 7:10toward the long-term need. That’s
177. 7:12correct, yes. Also clear.
178. 7:14And, and further, you just spoke about
179. 7:16step one. You have to estimate your
180. 7:18needs. Step two is obviously, um, the
181. 7:20story of, well, you have to make your
182. 7:22storyline clear to your stakeholders.
183. 7:24What is step three, then?
184. 7:26Then you actually move to the more
185. 7:27concrete, right? So how did we set up
186. 7:29that structure now? Um,
187. 7:31we were convinced of that from the very
188. 7:33beginning. We want to do that via a
189. 7:35club deal. But there are also different
190. 7:37paths. Yes, there are different
191. 7:38opinions on, well, wouldn't it be
192. 7:40better to work with one party? That
193. 7:41certainly has its advantages, too. It
194. 7:43makes it a lot easier, since you only
195. 7:45deal with one party.
196. 7:46speaking. We very consciously chose to
197. 7:48work with multiple parties
198. 7:49uh for various reasons. One, uh reason
199. 7:52one is that we were also looking at
200. 7:54long-term financing. If you are already
201. 7:57involved with multiple parties for
202. 7:59short-term financing, you have already
203. 8:00built that relationship. And then, um,
204. 8:03yes, it's easier to work with those
205. 8:05parties afterward when you move to
206. 8:07concrete instruments, but not limited
207. 8:09to just that party. Uh, not unimportant
208. 8:12to mention. It is also a way of
209. 8:14spreading uh your risks. You don't work
210. 8:16with one party, but, uh, today we are
211. 8:18working with six parties in total. Um,
212. 8:21less dependent.
213. 8:22Why not two or three? Six is a lot. Um,
214. 8:25we had said in advance: "We want
215. 8:27between four and six parties, and
216. 8:29Belgian anchoring was also important."
217. 8:32So we also wanted at least two Belgian
218. 8:34banks involved. But we also found it
219. 8:38important to look internationally,
220. 8:39because many of the long-term
221. 8:41instruments don't just have a Belgian
222. 8:43character; they are also international.
223. 8:46Um, so we spoke with various parties.
224. 8:49Six of them emerged from that. That was
225. 8:52our maximum, but there was a lot of
226. 8:53interest, a lot of eagerness to work
227. 8:55with us. What we also found important
228. 8:59in setting up that credit line was that
229. 9:01as few conditions as possible were
230. 9:02attached to it, right. Regarding
231. 9:06covenants, regarding reporting.
232. 9:08Um, we also found flexibility to be
233. 9:10important, maturity. So we now have a 5
234. 9:13+ 1 + 1 uh credit line.
235. 9:17Um, and finally, let's not be coy, the
236. 9:19price is also not unimportant. If you
237. 9:21are sitting around the table with
238. 9:23several parties, better negotiation,
239. 9:24you also have more possibilities. Yes.
240. 9:27Okay. Okay.
241. 9:28No, that is very clear to me. And and
242. 9:30furthermore
243. 9:32so yes, how does that actually proceed?
244. 9:34Uh
245. 9:35how do you actually go about your
246. 9:36negotiation? Yes, that's right. Uh, as
247. 9:39I explained earlier in the CV podcast,
248. 9:41we are a public limited company, so we
249. 9:44are also bound by public procurement
250. 9:45law. So there is a certain procedure
251. 9:49behind it which has, um, yes, certain
252. 9:51rules. So you must also indicate in
253. 9:54advance what the selection criteria are
254. 9:56; they are also publicly available. So
255. 9:58in what way are you going to decide?
256. 10:00The financial aspect is of course an
257. 10:02important one, but certainly not the
258. 10:03only one. But how did we start?
259. 10:05Actually, everything started with
260. 10:07introductory meetings. I think that was
261. 10:09perhaps not so unusual. I was appointed
262. 10:12and all the banks want to get to know
263. 10:13you. So, apart from us embarking on
264. 10:16this process, there were already quite
265. 10:18a few introductory meetings. And we
266. 10:21noticed from day one a lot of interest
267. 10:23in, uh, yes, lending us money as a
268. 10:25company. I think the nature of the
269. 10:28business contributes a lot to that as
270. 10:29well. Um, but did we then start by
271. 10:32surveying the broader market? Just to
272. 10:34indicate, yes, where is there, uh,
273. 10:36interest? Right, we then postponed what
274. 10:39we call the selection guide and the
275. 10:40criteria.
276. 10:43And then, um, you receive offers from
277. 10:45various banks. At the same time, we
278. 10:49worked on our financial memo. That was
279. 10:51a very extensive memo. Perhaps just a
280. 10:55bit too extensive for the purpose of
281. 10:56the credit line, but that will
282. 10:58certainly help us with long-term
283. 10:59financing later on. And it was also a
284. 11:03good exercise for us to test our own
285. 11:05story, the financial story, and align
286. 11:07it with the
287. 11:09with the strategy of the entire company
288. 11:11.
289. 11:11Nice.
290. 11:13Then we conducted interviews with all
291. 11:15the banks and, yes, that's when the
292. 11:17real work begins. Then there are, uh,
293. 11:19term sheets.
294. 11:20That’s a lot of work. Talking to all
295. 11:22those parties, that must have been, at
296. 11:24that moment for you as CFO,
297. 11:27Yes, I would say almost priority number
298. 11:29one to, uh, manage the process
299. 11:31throughout.
300. 11:33Um, in the credit line story, we did
301. 11:35divide the work. So, I have someone on
302. 11:39my team who certainly invested at least
303. 11:41as much time in it as I did. But once
304. 11:46you get your term sheets, so you were
305. 11:47always there for the intro meetings,
306. 11:49but when the term sheets come in, yes,
307. 11:51then the real work starts, because you
308. 11:53have to make the trade-offs. Then come
309. 11:57the final negotiations, which mainly
310. 11:59revolve around the price.
311. 12:02And then an award is made. We selected
312. 12:05six banks. Two Belgian, two French, and
313. 12:08two Dutch, coincidentally. So that
314. 12:10wasn't planned in advance. Uh
315. 12:11that wasn't planned in advance. Uh, yes
316. 12:13. Okay. What happened after that?
317. 12:16So I think we decided that in, uh, May
318. 12:18at an audit committee, followed by a
319. 12:20board meeting in May. Uh, yes, then you
320. 12:24start dotting the i's. So the prices
321. 12:26were set, but then the contracting
322. 12:28phase begins, because you always work
323. 12:30with a, with a legal advisor.
324. 12:33Um, and that took quite a bit of effort
325. 12:35. Yes, those dots on the i's seem very
326. 12:40simple, but then, yes, a number of
327. 12:42things come up.
328. 12:44The devil is in the details.
329. 12:46Right, that's right, that's right. Um,
330. 12:48so that did, yes, it did drag on for a
331. 12:51bit. As you said earlier, at
332. 12:55Tomorrowland I still had to put in
333. 12:57quite some time. But it turned out well
334. 13:00. In the end, it was signed, I think on
335. 13:02August 18th.
336. 13:03Mm-hmm.
337. 13:03So, uh, from then on, it’s, uh, live.
338. 13:07Yes, the actual signing process took
339. 13:09just as long as the process from the
340. 13:11interviews to the decision. Yes.
341. 13:14This is obviously super interesting for
342. 13:16our CFOs. But I am especially curious
343. 13:18about, yes, what tips would you give to
344. 13:21those potentially starting a similar
345. 13:23journey? Perhaps for a larger amount.
346. 13:25Uh, what are your tips?
347. 13:27Any thoughts?
348. 13:28Yes, um, we certainly learned a lot
349. 13:31from it, right? Like I said in a
350. 13:34previous podcast, surround yourself
351. 13:36with the right people. That has also
352. 13:40been very important in this case. We
353. 13:43were able to work with an advisor who
354. 13:45was very, uh, good, who really had
355. 13:47knowledge of going through such
356. 13:49processes. But also important, we
357. 13:52personally clicked well with that
358. 13:54advisor, too. And I don’t think you
359. 13:56should underestimate that, right? You
360. 13:58are entering a process of several
361. 14:00months. Um, if you work at different
362. 14:03speeds or have a totally different way
363. 14:05of working, that goes poorly.
364. 14:07So, uh, we were really lucky to work
365. 14:10with someone very strong there. So that
366. 14:12is definitely my first tip.
367. 14:15A second, I think, um, it’s perhaps a
368. 14:17no-brainer, but I definitely want to
369. 14:19mention that you must know your file
370. 14:21well enough when you talk to the banks.
371. 14:24Yes. They ask questions about your
372. 14:26multi-year plan. They ask questions
373. 14:28about the investments that are, uh,
374. 14:30right in front of you. Yes, then you
375. 14:32must be able to explain that. Those are
376. 14:35basics, but you must know them.
377. 14:38And finally, having the stakeholders on
378. 14:40board should also not be underestimated
379. 14:42, right? Um, especially if it's the
380. 14:44first time you are undertaking such a
381. 14:47process. Uh, it is something completely
382. 14:49new. Um, also your stakeholders, and
383. 14:51stakeholders are broad, right? That’s
384. 14:53your organization, but that is
385. 14:54certainly also your board of directors.
386. 14:56Uh, those are your colleagues in the,
387. 14:58uh, executive team. They must also
388. 15:00sufficiently understand why this is
389. 15:02necessary, how you are going to
390. 15:03approach it, uh, what the next steps
391. 15:05are. So for me, that is, uh, an
392. 15:07important third tip.
393. 15:09Okay, thank you for your insight. It
394. 15:10was a very good conversation, and I
395. 15:12look forward to the next time.
396. 15:13My pleasure. What this CFO Playbook
397. 15:16makes clear is that a 500 million
398. 15:18credit line is no mere financial
399. 15:20transaction. It is a strategic CFO
400. 15:23process. You must be clear internally
401. 15:27on why you need the funding, what room
402. 15:29you want to create, which risks to
403. 15:31manage, and which terms matter for your
404. 15:33organization's future. At least as
405. 15:37important. You are not just negotiating
406. 15:40for money. You are negotiating for
407. 15:43trust, credibility, and financial
408. 15:45leverage. Thank you for being willing
409. 15:47to share your experience and, of course
410. 15:49, your insights with us. And for our
411. 15:51viewers, we look forward to the next
412. 15:53episode.
413. 15:58Next week on the CEFO podcast, Efier.
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