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Financial Advisory

Commodity Traders

Trends & Challenges

  • Since the onset of Covid-19, both soft and hard commodities have experienced prolonged, substantial uplifts in prices. In both sectors, there was a sharp reduction in demand in Q1 2020 however with government stimulus and countries exiting lockdowns, demand has returned to pre-pandemic levels. On the supply side, forced factory closure and disruptions to supply chains caused by Covid-19 has meant that the uplift in supply across many commodities has lagged demand, driving the price increases.
  • Whilst soft and hard commodities have their own distinct market influences, there are a number of overarching challenges facing both sectors:
    • Climate change and ESG – are likely to be the defining issues across the commodities sector over the coming decades whether it be through the disruption to production/supply by extreme weather events, level of required investment in the transition to sustainable resources or the near term pivot of capital to more sustainable industries.
    • Fraudulent activities – over recent years there have been a number of high profile bankruptcies within the sector involving varying levels of alleged fraud. This has led to an increased focus within the sector on AML, risk and compliance which in turn has flowed through to lenders appetite to continue funding the sector, potentially reducing the available liquidity available to market incumbents.
    • Working capital – the rapid increase in prices across many commodities has increased the working capital demands within the industry, particularly traders, in what is already a highly capital intensive industry. In the short term this will reduce liquidity and may leave certain companies susceptible to a commodity price corrections, particularly if they focus on a small basket of commodities.

Case Studies

Case Study

Liquidation


  • Global agri-foods, resources and consumer brands business with turnover in excess of $3bn.

  • Appointed as joint liquidator over key companies in the group.

  • Co-ordinated teams working cross-border and project managed complex workstreams.

  • Pro-actively managed stakeholder communications and reporting to creditors.

  • Identified sources of asset recovery from cargo insurance and successfully pursued and settled complex claims.

  • Dealt with institutions who had financed receivables and potential claims under trade credit insurance policies.

Case Study

Creditor Advisory


  • Appointed as financial restructuring adviser to the senior syndicated lenders to a global commodity trading business, with turnover of $7bn and debt in excess of $2.5bn.

  • Worked closely with CoCom to shape terms of new money and reinstated debt to deliver required support. Scope included business plan assessment, options analysis and valuation.

  • Our role included a red flag review of the business and divestiture plans, and advising lenders on strategic options.

  • Negotiated with legal and financial advisors with respect to the terms of the restructuring which was ultimately agreed and implemented by a two-class UK Scheme of Arrangement.

Case Study

Turnaround


  • Global steel-maker initially seeking Government support to cover the impact of Covid-19, which then developed to negotiations regarding a full redevelopment of operations.

  • The businesses largest expenditure was globally sourced commodities used for raw materials.

  • We were appointed turnaround advisor to the business providing hands-on support to the management team to improve performance, manage cash, develop turnaround business plans and manage various stakeholders.

  • This work required the review of raw material options, negotiations with commodity suppliers and modelling of potential business plan scenarios and raw material impacts.

Key Contacts

financialadvisory@teneo.com
Regulatory Information

Regulatory Information

Teneo refers to Teneo Holdings LLC and its subsidiaries and affiliates worldwide. Securities products and services are offered in the United States by Teneo Securities LLC, member of FINRA and SIPC.

Details of the entity providing services, legal and regulatory information in respect of the Teneo entity are also included in our engagement letters.

Please see Terms of Use for full legal notices and further information.

Specific information relating to our regulated entities which provide services to clients is detailed below:

Registered NameLegal FormRegistration Location and ReferenceRegistered OfficeData ProtectionRegulator(s)Professional Indemnity Insurance
Teneo Financial Advisory LimitedLimited CompanyEngland & Wales, 131929585th Floor, 6 More London Place, London, SE1 2DAUK - ZA920639The Institute of Chartered Accountants in England and Wales (“ICAEW”) C008873136. All insolvency practitioners are licenced by the ICAEW. ICAEW Designated Professional Body licence for a range of investment business activities.Details of the professional indemnity insurer can be provided on request.
Teneo Securities LLCLimited Liability CompanyUSA - Delaware280 Park Avenue, 4th Floor, New York, NY 10017N/AFinancial Industry Regulatory Authority (FINRA) #151256.
Securities and Exchange Commission (SEC).
Details of the professional indemnity insurer can be provided on request.

Teneo Securities LLC’s Business Continuity Planning

Teneo Securities LLC has developed a Business Continuity Plan (“BCP”) on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our BCP.

The Firm has developed and installed a BCP in the case of any business disruption that causes the Firm to have limited or no communications with its employees or customers. Our plan anticipates two types of business disruptions, internal disruptions which affect only our Firm's ability to do business (such as a fire in our building) and external disruptions that prevent the operation of securities markets or other firms (such as natural disasters or acts of war).

The Firm intends to stay in business during both internal and external disruptions due to the fact that the Firm employees can conduct Firm related business from alternate off-site physical locations and the Firm maintains an alternate location for the maintenance of its books and records. We anticipate that the Firm will recover from internal business disruptions within 24-48 hours. An outage due to an external business disruption may be longer and is beyond the control of the Firm. However, the Firm will endeavor to resume business as soon as it is possible for the Firm to establish business operations from alternate off-site physical locations.

The Firm’s BCP specifically addresses the following areas related to Firm operations:

  • Data back-up and recovery (hard copy and electronic);
  • All mission critical systems;
  • Procedures to test and determine the Firm's ability to do business (i.e., financial and operational assessments);
  • Alternate communications between customers and the Firm;
  • Alternate communications between the Firm and its employees;
  • Alternate physical location of employees;
  • Critical business constituent, bank, and counter-party impact;
  • Regulatory reporting; and
  • Communications with regulators.

If you have questions about our business continuity planning, you can contact us (212) 886-1600.