For more information, please contact: Mark Stout +32 2 417 41 98 Enzo Soi + 32 2 417 35 51 Securitisation, KBC Bank This Information Memorandum is dated 30 November 2010 Rosy Blue International SA USD 125 mln Trade Receivables Securitisation Program Any issue and offering of securities related to the Rosy Blue International S.A. Trade Receivables Securitisation Program described in this Information Memorandum of 30 November 2010 shall not constitute a public offering in Belgium and will require an investment per investor that shall not be lower than the USD equivalent of EUR 250,000. General Program Summary: Rosy Blue International SA, a special purpose company, will agree to purchase non-interest bearing trade debts which satisfy pre-determined eligibility criteria (the Receivables) from Rosy Blue NV (Rosy Blue Belgium). Rosy Blue International SA will fund its interest in the Receivables primarily by the issuance of euro-commercial paper (CP) denominated in US dollar that is assigned a short-term credit rating of F-1+/P-1 by Fitch and Moody s. In the event that Rosy Blue International SA is unable to issue CP at any time, certain support facilities are available to finance Rosy Blue International SA s payment obligations in respect of maturing CP. Issuer: Rosy Blue International SA is a bankruptcy-remote public limited liability company in Luxembourg, set up as an orphan company. Its shares are held by a Dutch foundation (stichting). Rosy Blue Belgium has loaned the issue price of the Rosy Blue International SA shares plus incorporation costs to the foundation.
Structure Diagram: The following diagram sets out the proposed transaction structure: Rosy Blue clients Chartis Insurance UK Limited Receivables Credit Insurance KBC as: CP Dealer Issuing Rosy Blue NV Receivables Rosy Blue CP and Paying CP International Agent Investors Services Services Services The bank of New York Mellon as: Administrator Security Trustee SCB as: Accounts Bank Liquidity Provider Swingline Provider Transaction Bank Antwerpse Diamantbank as: Receivables Agent Collection Bank Back-up Servicer Sale and Purchase of Receivables Receivables Purchase Agreement: Purchase Price: Rosy Blue International SA entered into a receivables purchase agreement with Rosy Blue NV (the Seller). Pursuant to this receivable purchase agreement, Rosy Blue International SA agrees to purchase receivables from the Seller. These receivables have to comply with certain eligibility criteria. To the extent that they do not comply with these criteria, the Seller is obliged to repurchase the receivables. The collections that Rosy Blue International SA receives will, subject to the priority of payments (see below), twice per month be applied to purchase new receivables from the Seller. The purchase price of these receivables is based on their face value minus a discount. This discount compensates Rosy Blue International SA for funding costs and operational expenses and will be used to provide additional collateral, if required (see below). The discount will be relatively high, 20%. However, the discount is based on a "worst case scenario" and therefore any amounts that are not applied to cover the above will be paid to the Seller by way of deferred consideration. If, for some reason, more collateral is required by Rosy Blue International SA to protect itself against the consequences of dilutions (which could be the case if there is an 2
increase in the amount of dilutions) and/or interest increases, additional collateral will have to be maintained by Rosy Blue International SA. Deferred Consideration: Repurchase Option: Dilutions and Defaults: The Seller will support the structure by agreeing in the receivables purchase agreement that part of the purchase price of the receivables will be deferred until certain conditions have been met. The transaction documentation grants the Seller an option to repurchase from Rosy Blue International SA receivables that Rosy Blue International SA originally purchased from the Seller. The purchase price of the relevant receivables will be the face amount of such receivables. If a debtor under the receivables fails to pay the full amount of the receivables due to set-off or deductions (dilutions), the Seller will be obliged to compensate Rosy Blue International SA for the difference between the face amount of the receivables and the amount actually received. An early amortisation event will be triggered if the Seller fail in their obligation to pay. With respect to defaulted receivables, Rosy Blue International SA will have the benefit of a credit insurance agreement. This agreement insures credit risk in relation to the receivables. The insurance policy has a deductible of USD 15 million and a maximum insured amount of USD 125 million. Funding Euro-CP in USD: Rosy Blue International SA will finance the purchase of the receivables by issuing euro-commercial paper in USD with maturities of 1 month up to 6 months. KBC will act as its issuing and paying agent. Should Rosy Blue International SA be unable to attract sufficient funding in the commercial paper market to repay maturing commercial paper, it can make drawings under a liquidity facility agreement with SCB. Rosy Blue International SA has, in addition, entered into a swing-line facility agreement with SCB under which Rosy Blue International SA can make drawings in the event that it has, as a result of a timing mismatch, insufficient funds available to pay funding costs and/or operating expenses. Borrowing Base: Both the amount of commercial paper that Rosy Blue International SA can issue and the amount that Rosy Blue International SA can borrow under the liquidity facility agreement are maximised by reference to a borrowing base, with a total maximum of USD 125 3
million. The borrowing base is calculated by reference to the face value of the receivables minus the receivables that are used for overcollateralisation purposes to cover the deductible (of the insurance policy), dilutions, interest and operating expenses. If, for example, LIBOR rates or dilutions change, the borrowing base will change correspondingly. Cash Reserve: To the extent that there are reductions in the borrowing base resulting from changes in interest rates or dilutions, Rosy Blue International SA will be obliged to maintain a cash reserve in an amount equal to the difference between the borrowing base and the actual outstanding borrowings of Rosy Blue International SA. To the extent that the borrowing base increases or the actual outstanding borrowing decreases, a corresponding amount standing to the credit of the cash reserve will be released. Priority of Payments Basic Concept: The transaction structure includes priority of payment provisions that set out the basis on which creditors of Rosy Blue International SA will be paid. Basically, all operating expenses of Rosy Blue International SA and the cash reserve (see above) will be paid first. Remaining amounts will be applied to fund accrued interest on CP and, thereafter, to pay the swing-line facility provider, followed by the holders of commercial paper and the liquidity facility provider. The balance can be applied to purchase new receivables to the extent that such receivables comply with the eligibility criteria. Should any amounts be left after all payments and provisions on a particular payment date have been made, these can be applied to pay deferred consideration to the Seller. Eligibility Criteria 1 Debtors Eligibility: Debtors who owe Receivables to the Seller must meet certain basic eligibility criteria, which must be satisfied in respect of each Receivable to be sold at the time of the sale of that Receivable to Rosy Blue International SA, including: they are not individuals and do not have the benefit of consumer credit or similar legislation; the Debtor is not insolvent; 1 The receivables to be purchased by Rosy Blue International SA have to meet certain eligibility criteria, as defined in the insurance policy with Chartis Insurance UK Limited. 4
the Debtors are located in Australia, Belgium, Canada (but only in the provinces of Ontario and Quebec), China, Cyprus, Denmark, Finland, France, Germany, Hong Kong, India, Ireland, Israel, Italy, Japan, Lebanon, Malaysia, Portugal, The Netherlands, Singapore, Spain, South Africa, Switzerland, Taiwan, Thailand, United Kingdom, U.A.E., Austria, Norway, Czech Republic, Luxemburg, South Korea, Brazil, Saudi Arabia, Sri Lanka, Turkey, Armenia or USA; the Debtor is billed in accordance with the Seller credit and collections policies and procedures (including arrears procedures); the Debtor is not an affiliate or holding company of Rosy Blue Belgium or an affiliate of any holding company of Rosy Blue Belgium or an employee of the Seller; and the Debtor is not in default under any agreement with the Seller. Receivables Eligibility: All Receivables which are purchased by Rosy Blue International must satisfy certain basic eligibility criteria at the time of sale of the relevant Receivable, including: they are non-interest bearing trade receivables, arising from the Seller' sale of rough diamonds or polished diamonds, and are denominated in US dollars; they are not Receivables which are past due or in respect of which the relevant Debtor is insolvent; they are stated to be governed by and subject to Belgian law in respect of receivables generated Rosy Blue (and no other agreement with the Debtor provides otherwise); such Receivables, together with any other outstanding Receivables, shall not be in excess of pre-determined country and buyer concentration limits; they are solely, legally and beneficially owned by one of the Seller and no security or other third party interest has been granted in respect of them; the due date of the Receivable does not fall more than 120 days from the date of the related invoice; 5
there are no circumstances which (nor the performance of any of the terms of any sale of Receivables) would give rise to any lien, right of rescission, counterclaim, set-off, equity, defence or right of retention or compensation against the Seller; and they are insured under the terms of the Credit Insurance Agreement. Enhancement Features Credit Enhancement: Credit protection for the CP Noteholders is derived from (i) dynamic overcollateralisation, (ii) an insurance policy provided by AIG UK Ltd on the underlying portfolio of trade receivables and (iii) stringent early amortization triggers. Liquidity Enhancement: Rosy Blue International SA is the loss payee and co-insured of a receivable insurance policy with Chartis Insurance UK Limited (associated with the AIG group) under which defaults on the portfolio are protected up to USD 125 mln, with a first deductible of USD 15 mln. In the transaction, this first deductible will be covered by an overcollateralisation of the highest of 20% of Outstanding Receivables or USD 28 mln divided by (1+Yield) As a result, losses up to overcollateralisation level will be borne by the Seller. However, losses due credit risk above USD 15 mln will be insured by Chartis Insurance UK Limited. Additionally, early amortization events which are triggered in the event of a deterioration in the performance of the underlying portfolio or a change in the condition of the parties to the transaction (particularly that of Rosy Blue Belgium, in its role as Seller and Servicer) greatly protect CP Noteholders against credit risk. The most important portfolio triggers are: default trigger: in case defaults (i.e. claims on receivables more than 90 days past due) exceed USD 10 mln; delinquency trigger: in case 10% of receivables portfolio are between 61 and 90 days past due; and dilution trigger: in case dilution ratio exceeds 5%. A 364-day liquidity facility of USD 125 mln provided by SCB will back Rosy Blue International s asset-backed commercial paper 6
program in connection with its purchase of a portfolio of USD denominated trade receivables originated by Rosy Blue NV. This facility is available to finance Rosy Blue International SA s payment obligations in respect of maturing CP as well as to fund any shortfall of the payment of the purchase price for the new Receivables due to the Purchaser. Interest Rate Hedging: Rosy Blue International SA s cost of funding (inter alia interest to CP holders) will generally be covered by the dynamic overcollateralisation. Transaction Parties Arranger, Issuing and Paying Agent and Dealer Liquidity Provider, Swing-line Provider and Transaction Bank: KBC has originally arranged this trade receivable securitisation transaction for Rosy Blue Belgium and will also act as sole Dealer under the program (as well as Issuing and Paying agent). The Transaction has been amended in order for Standard Chartered Bank to provide the Liquidity Facility and the Swing Line Facility to Rosy Blue International S.A. Standard Charted Bank will also act as Transaction Bank. Seller and Servicer: The transaction s ratings and creditworthiness is not dependent on the creditworthiness of Rosy Blue Belgium. Nevertheless, we rely on the ability of Rosy Blue to continue to originate and sell receivables to Rosy Blue International SA and to be able to act as Servicer. However, Antwerpse Diamantbank will act as back-up servicer in case there is a failure on the part of Rosy Blue Belgium and simultaneously an early amortization will be triggered (i.e. no receivables are purchased and no CP is issued anymore). Receivables Agent, Collection Bank and Back-up Servicer: Antwerpse Diamantbank, owned by KBC for 99.99% and a market leader in the financing of the international diamond trade and industry, will assist Rosy Blue International SA with collection arrangements in relation to receivables generated by Rosy Blue Belgium. Antwerpse Diamantbank will also act as back-up servicer. 7
Administrator and Security Trustee: Insurance Provider: The Bank of New York Mellon will act as Rosy Blue International SA's administrator and have overall responsibility for Rosy Blue International SA's cash management, accounts administration, issue of commercial paper and drawings under the Liquidity Facility and the Swing-line Facility. The Bank of New York Mellon will also act as Security Trustee. Rosy Blue International SA will become additional-insured and loss payee under Rosy Blue Belgium's credit insurance policy with Chartis Insurance UK Limited). Key sales points - Rating of F-1+ by Fitch and P-1 by Moody s - Yield pick-up versus straight CP - USD denominated - Possibility to diversify investment portfolio - Very strong involvement of Standard Chartered Bank, Antwerpse Diamantbank and The Bank of New York Mellon. 8