Sergey Lee, the project manager told about the work performed during the "Design" phase. The results of diagnostics of current corporate financing processes at “Samruk-Energy” JSC and SA (affiliates and subsidiaries) of organizational perimeter were obtained. The target model of business processes was updated, the action plan for business change was developed, the regulation on debt management, capital management policy, regulatory documents for cash pooling arrangement, the regulation on cooperation with rating agencies, the Order on appointment of key and end users, etc. have been prepared.
The project involves the improvement and introduction of targeted methodological processes of the Company’s corporate financing, including the introduction of cash pooling based on banking system. In this regard, the project team developed a targeted concept of arranging cash pooling. In turn, functional requirements and terms of reference for banking systems were agreed with operator bank for implementation of cash pooling.
“Along with scheduled activities, we are planning to conduct preliminary negotiations with lenders of subsidiaries of organizational perimeter in the short term in order to discuss the possibility of refinancing loans," said Sergey Lee.
Cash pooling operation concept:
Cash pooling enables to:
- Avoid situations where, at the end of the day, some subsidiaries have temporarily available cash, while others are forced to obtain loans to cover cash gaps;
- Reduce considerably the balances on the accounts;
- Use almost all proceeds on the same day basis;
- Minimize the need for loans and expenses for their receipt / servicing;
- Improve placement conditions through consolidated balances of subsidiaries;
- Improve the accounting of cash flow within the group.