BoXX Global and its recycling subsidiary Harbor Green Recycling (HGR) are working with Republic Services Inc., (#2 in US trash) and other major US trash companies to help recycle their growing mountains of used boxes and paper.
Through its “Think Inside the BoXX” program, BoXX is succeeding in building new box recycling plants in the US next to the used boxes rather than shipping them to Asia for processing. Others have tried this and failed. BoXX is succeeding with a new approach. BoXX redesigned a recycling plant that is smaller, quieter, more efficient and uses no water versus the old wet pulping plants. This new BoXXTech equipment reduces community load while delivering community benefits like good local jobs and tax revenue. Municipalities love it. Las Vegas is the next site.
Republic Services inspected and rated HGR’s new plant at up to 30,000 tons monthly capacity, qualifying HGR for Republic’s discounted domestic box pricing and 30-day payment terms, subject to HGR posting a “good faith” supplier deposit with Republic to gain access to additional feedstock at excellent pricing and terms.
HGR has buyers for 30,000 tons+ of recycled boxes per month, so HGR agreed to post the supplier deposit with Republic. HGR is thus seeking up to $10 million from an alternative credit investor to post a supplier deposit with Republic Services on behalf of HGR. The Depositor will be paid 20%/year of the deposit amount as compensation for posting the deposit with Republic. The deposit will speed up HGR’s turnover and profits resulting in alpha of over 10% paid to depositors versus Republic Services bonds.
BoXX Vault has been structured to lock in the high yield while locking out risks and promoting the saving of 17 trees for every ton of boxes recycled according to the US EPA. Recycling 30,000 tons of boxes per month saves 6.12 million trees per year and reduces carbon by over 900,000 tons per year. Environmental certification provided.
BoXX Vault- Republic Services Supplier Deposit Features
Deposit type: Routine supplier deposit placed with Republic Services in return for Republic’s discounted domestic pricing and 30-day repayment terms on used boxes delivered to HGR for recycling.
Compensation to depositor: 20% per year, paid semi-annually.
BoXX provided sinking fund for the fee, trade-by-trade.
Used Box Supplier: Republic Services Inc.
Used Box Buyer: Harbor Green Recycling, under irrevocable documentary letters of credit.
Deposit custodian: Republic Services, Inc., an investment grade rated corporation.
Credit risk: Republic Services, Inc.
Credit risk covered by a surety bond and strong Republic financials.
Repayment risk: The risk that deliveries of used boxes by Republic to HGR are not paid for within 30 days causing Republic to tap the supplier deposit.
Repayment risk is mitigated by East West Bank’s agreement to discount the short-term inventory loans from Republic to HGR, repaying Republic prior to the due date, and eliminating the need for Republic to ever tap the supplier deposit for repayment. From delivery to loan repayment normally takes 1-2 weeks. HGR has several other back-up funders in place in addition to EWB.
BoXX Vault isolates the supplier deposit from all operational, delivery and other risks.
Amount: $250,000-$10,000,000.
Term: 1-year, early liquidity possible, trade-by-trade.
Daily mark: 100+ the accrued fee (zero volatility).
Deposit Owner: Investor.
Frequently Asked Questions
What is the financial risk in making the supplier deposit? The financial risk of making the deposit is exposure to Republic Services, as they hold the deposit.
How is the financial risk to Republic managed?
Republic Services provides a surety bond insuring the deposit.
Dealing with a financially strong company reduces financial risk. Republic Services is the second largest trash company in the US with 41,000 employees, $67.9 billion market cap, $15.9 billion revenue, $2.0 billion in net income, investment grade rated, member of the S&P 500 and the Fortune 500.
What is the repayment risk, and how is it mitigated? Republic Services delivers used boxes to HGR’s San Bernadino plant, creating an obligation for HGR to pay Republic for the boxes within 30 days of the delivery date. This risk is mitigated by having in place take-out financing for each loan with East West Bank of California. Plus, HGR has several other parties to discount the short-term loans.
What about other risks? BoXX Vault has avoided, eliminated, mitigated or hedged other risks through its unique structure:
Operating Risk: None. The Republic supplier deposit has no exposure to the operating risks of processing or transporting used boxes.
Credit Exposure to EWB: No. The inventory loan from Republic is repaid by East West Bank based by prior arrangement between HGR and EWB. EWB is guaranteed repayment from HGR via letters of credit. EWB has no recourse to the Republic deposit ever.
Credit exposure to HGR: No. The depositor has no credit exposure to HGR other than for the fee for which a sinking fund is used to minimize that risk.
Market Risk: No. All trades are done on a simultaneous buy/sell basis with a positive spread.
Currency Risk: No. All trades are done in US dollars.
Duration Risk: No. Each trade is 30 days or less.
Correlation Risk: No, completely uncorrelated to other markets.
Volatility Risk: No, monthly marks of 100+ the accrued fee.
Liquidity Risk: No. Each underlying trade is self-liquidating in around 14 days.
Governance Risk: All funds held at Republic Services. The deposit remains in the name of the investor. No contingent liabilities.
Socially Responsible: Yes, 17 trees and other resources saved for each ton of boxes recycled.
Creates Domestic US jobs: Yes, around 30 jobs at the new CA plant.
Can you discuss title to the used boxes and how it relates to the deposit? HGR receives title to the used boxes upon delivery by Republic to HGR, and the liability for HGR to repay Republic within 30 days. If HGR does not repay the loan within 30 days, Republic may pay itself from the supplier deposit. However, takeout financing is in place prior to each loan, assuring repayment and that the deposit is never touched.
Does HGR inspect and weigh the used boxes? Yes. HGR inspects and weighs the boxes upon delivery to it plant in San Bernadino. The used boxes are then packed into the 40’ containers, 20 tons per container (Day 1). A professional logistics company picks up the containers and delivers them to LA/Long Beach Port 75 miles away (Days 2-5) for ultimate delivery to HGR’s customers. (All goods and other risks are insured from the time of Republic delivery in San Bernadino to delivery at Long Beach Port.)
How is the loan completed? The Bill of Lading is the final document needed to complete East West Bank’s requirements for an inventory loan to repay Republic Services for any outstanding balances, releasing any liability to Republic and any claim Republic may have on the deposit (days 6-7). There is no recourse by EWB to the deposit held by Republic. East West Bank purchases the loan for their own portfolio, eliminating the contingent liability on the deposit at Republic. EWB receives payment from HGR’s buyer via the LC issuing bank’s irrevocable documentary letter of credit guaranteeing the repayment to EWB.
What is the rationale for the deposit? HGR may complete trades in 1-2 weeks instead of 3-4 accelerating HGR’s tons of boxes that may be recycled on the available capital. Since our profits can be doubled by virtue of the deposit, HGR is happy to pay what is arguably an attractive rate/fee for limited risk.
Does Harbor Green Recycling have any strategic investors, or “financial muscle” behind it? Yes, Jiangsu Huatai Paper Group, one of China’s top paper groups. Jiangsu Huatai is a 20% owner of the new plant and stands ready to purchase 100% of any recycled paper pulp or unprocessed boxes for recycling at market prices at any time from HGR spot or on a long-term contract basis. HGR has made no such agreement currently to keep its options open.
How does BoXX Vault isolate the supplier deposit from operational, delivery and credit risks? There is no linkage to the supplier deposit other than by Republic for non-payment of inventory delivered to HGR after 30 days which is covered by EWB take-out financing.
Do BoXX and Harbor Green Recycling unconditionally guarantee the depositor against loss? Yes. Under BoXX Vault, Harbor Green Recycling LLC and HGR’s owner, BoXX Global, provide the depositor with an unconditional guarantee against any or all losses from making the deposit with Republic Services.
Are there hard assets backing the used box inventory loans? Yes. Each loan is collateralized by hard asset collateral worth at least 125% at liquidation prices if needed as backup collateral.
Harbor Green Recycling: Over 1 billion boxes successfully recycled to date:
Contact: William Lawton, Managing Member
BoXX Global, 21250 Hawthorne Blvd., Suite 500
Torrance, CA 90503
Lawton@seagateglobal.com Cell: +1-310-622-3000
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