InterimConnect

TTF News

Chinese import facility without using Bank facilities

Innovative Financing Solution for an MBO arranged by State Securities

Case Study 1. MBO keeps on Rolling.

Leading roller manufacturer, has secured its future growth following its management buy-out (MBO) and a £1/4 million funding line from Cattles Invoice Finance.

The manufacturer, which was established in 1987 and is Midlands based, provides rubber-coated rollers and composite covers to some of the biggest players in the food, leisure and paper industries. Despite being inundated with new business leads and opportunities, the company was struggling because cash low was tight and it needed a financial solution that was flexible and accommodating.

Wayne Smith, regional managing director at Cattles Invoice Finance, explains: "An invoice finance facility was the best option for the company, as it provided long-term financial support, as well as an injection of cash from the off-set. The facility means that as soon as the company raises an invoice, they receive up to 85% of its value within 24 hours, allowing them to pursue business opportunities without worrying about cash flow.

A Director of the company, comments: "The funding line from Cattles Invoice Finance has been a lifeline! We are really excited about the future of the business and are looking to further expansion plans over the next couple of years."

Case Study 2: MBO Plastics company

A Midlands based company which supplies injection mouldings of thermo plastics and blow mouldings of plastic bottles to a number of household names, had been established for more than 27 years.

The Managing Director of the company, was approaching retirement age and decided that a management buy-out (MBO) was the preferred exit route for the business. The existing management team were perfect candidates as they knew the business, the client and the ethos of the company inside and out.

Eric DeArmitt, regional sales manager for Cattle Invoice Finance in Birmingham, comments: "The majority of the money had been raised to support the MBO, however there was a funding gap that needed to be plugged."

A Director of the company, comments: "The extra funding from Cattle Invoice Finance enabled the transaction to go ahead. It will give us a strong working capital to go forward, allowing us to adapt to the needs of the business as it grows and enabling us to drive the business forward."

Eric DeArmitt of Cattles concludes: "An invoice finance facility is particularly effective when funding management buy-outs and, with the working capital provided, the team will be able to concentrate on the growth of the business and the client base."

Chinese import facility without using Bank facilities

An Interimconnect member with extensive Retail experience asked if Totalturnaroundfinance (TTF) could help with a financing problem.

A high street retailer with a number of outlets was importing products from China but preferred not to finance this under existing lines of credit. Letters of credit needed to be set up for the Chinese manufacturer and the importation financed until the goods were sold through the retail outlets. (90-120 +days).

TTF was able to put the member in contact with a Trade Finance organisation for a £350,000 rolling trade facility to issue the letters of letters and finance the shipments until sale. This was achieved with 10 days from the original phone call and without use of existing bank facilities.

Innovative Financing Solution for an MBO arranged by State Securities .

State Securities is expert at creating practical solutions to resolve business's financial headaches. A recent example of this occurred when the Managing Director of a leading spring and other metallic products manufacturer was approaching retirement. One of the business's Directors wanted to purchase the company to extend his existing portfolio. By acquiring the business he would be able to establish a profitable group of companies, benefiting from economies of scale.

State Securities was approached to provide buy-out finance. The assets of the business provided potential for around £150,000, by way of re-finance, however over typical terms for the relevant assets the company's cash flow was unable to support repayments. Acquiring the company's premises further compounded the problem. However, by State Securities also being able to provide a commercial mortgage secured by property, the asset transaction was written over a 60-month term thereby bringing the monthly payments within the affordable cash flow.

State Securities was able to develop a bespoke solution by refinancing the company's existing assets, under a hire purchase and supplemental chattels mortgage facility and providing a commercial mortgage of £500,000. The processing of the deal was not without complications, as is often the case with buyouts. State Securities is used to this type of complex transaction and by utilising its in-house Asset, Mortgage and Legal departments, State Securities was able to efficiently complete the deal, to the satisfaction of all parties.

By using State Securities flexible and solution-seeking attitude (traits other funders may not have had) the customer was able to effect a successful management buy-out.