Vendor Sales Facilities Case Study

Background

The principal of Jabiru Agribusiness has been a client since 1986. Jabiru imports nutritional additives, equipment and consumables (such as egg trays and cartons) for the poultry industry.

Organic waste has become a major problem for both egg producers and the meat bird growers. Approximately 65% of feed becomes waste and layers have a 12 month productive period and then the birds are euthanased and replaced. A typical egg producer with 250,000 birds will generate approx., 7,500 tonnes of organic waste per annum. The costs of disposing of this volume of waste are approx., $180,000 per annum – depending on location. This cost can be several times larger for a major egg producer.

Disposal of this waste has become a major problem with increasing restrictions on dumping of carcasses in landfill, and spreading of raw manure on food crops and grazing pastures.

Jabiru had secured the international marketing rights to a range of Thermophilic Vessel Composters (TVCs) manufactured in South Korea. The machines range in capacity from 500 litres to 80,000 litres and offer the ideal solution for the rapid processing of large volume batches of organic waste. Purchase price of the machines ranges from $US40, 000 to $US1m+.

The process operates at 70+degrees Centigrade and effectively pasteurises the wastes killing pathogens and seed propagules. Output is also typically odour free.

By enhancing the existing technology Jabiru has been able to substantially reduce the batch processing time for typical poultry shed waste from more than 24 hours to as little as 8 hours.

The biosoil output can be applied as a soil additive, with exceptionally good results, or it can be treated further to meet the classification for labelling as compost. Jabiru's reference site is selling their total output without any further processing to local primary producers for $100 / tonne at the farm gate. Gross Income from biosoil - 7,500 tonnes x $100 = $750,000 less CoP.

The technology has application in a wide range of industries and businesses that produce organic waste.

How AFNCF has assisted Jabiru

At the request of the client AFNCF has

Developed a financial model to assess the viability, and benefits of adopting the technology.
Developed pricing and quoting worksheets to provide individual customised quotes in both $AUD and $US – from the factory floor to installation and commissioning.
Negotiated a Vendor Finance Facility (operating lease with options) for end users to acquire the machines. The lender has the capacity to fund the machines for purchasers in Australia, New Zealand, North America, UK & Europe, the Middle East and Asia. (Jabiru had expressions from Saudi Arabia, New Zealand and Fiji).
Negotiated trade finance facilities for Jabiru to fund the manufacture and import / export of the machines, as well as a secondary facility for Australian buyers.

Benefits of the Vendor Finance facility

For the end users

100% funding - No deposit required. The operating lease reverses the traditional chattel mortgage facility that requires up to 30% deposit upfront or a significant collateral mortgage over real estate assets. (Client infrastructure costs cannot be added to the facility and may require borrowings from another source.)
Monthly rental costs are generally cheaper than loan repayments.
The rentals and operating costs are a replacement for an existing cost (waste disposal), and not an additional burden on cash flow.
Tax effective - 100% of the equipment rental is tax deductible.
Doesn't affect the client’s global borrowing limits with their current lenders.
Assistance with the finance application – AFNCF will assist the client with the finance application – allowing them to get on with their business and reduce the stress associated with the process.

For Jabiru