Case Study: Advisory Services and Unlocking Working Capital

Objective: Exploring Options to Save Money and Unlock Additional Funding

A business in the printing industry had been experiencing strong growth over a number of years. Due to their expansion they required an additional printing press and an increase to their working capital funding lines.

The printing industry had been experiencing difficulty over the past few years, with several companies going into receivership. Although our client’s business was largely shielded from the downturn due to forward planning, their bank reneged on an earlier verbal approval to provide the additional finance despite our client having already signed a purchase contract. This was due to the bank’s credit department having concerns about the industry as a whole.

The business had all its facilities with one bank, meaning that they were essentially held to ransom. Despite a broad-based industry downturn, our client’s business had continued to perform strongly, a fact that was being disregarded by their bank. The business was paying a high interest rate on its existing working capital facilities and equipment loans. Their banker was making no attempt to advocate for our client internally.

Recommendation:

Invictus followed a 3 stage process.

Stage 1:  Understand what the outcomes the group were wanting to achieve:

  • Fund the purchase of the new printing press
  • Ensure the trading business had its cash flow support facility
  • Address the risk of having all business and personal facilities with the one bank

Stage 2: Prepared a detailed Finance Proposal which outlined:

  • Background overview of the structure of the Group, the trading business, the investment entities;
  • Management structure and experience;
  • Industry Analysis which measured the performance of the industry as a whole and then where and how our client’s business compared to the industry;
  • Financial Analysis which included preparing a detailed ‘3 Way” Cash Flow Forecast to support the ongoing viability of the business under the proposed new finance structures.

Stage 3: Used our extensive contacts across bank and non-bank financiers to seek support for the proposal on behalf of our client, ensuring that each prospective lender was fully aware of the outcomes our client wanted to achieve.

Invictus ‘de-risked’ the client’s exposure to the one bank and successfully negotiated facilities across 3 new financiers.

Financier 1 provided finance to complete the purchase of the new printing press and for the refinance of the residual due on an existing press at a cheaper rate than the client’s existing bank.

Financier 2 provided a debtor finance facility that enabled continuity and certainty of the business’s cash flow.

Financier 3 provided a facility to refinance the existing commercial loan over the trading property and Invictus successfully negotiated with the outgoing bank to waive the break fee for the Fixed Rate Loan.

Key Points:

  • Meet with you to obtain an understanding of your business, including ascertaining your lending requirements and discovering what is most important to you.
  • Undertake our own research on your industry and market, and use the combined information to produce a proposal
  • Approach a selection of bankers with whom we work to discuss the proposal and obtain an indication of appetite, pricing and terms
  • Review & select those banks with whom we want to continue discussions, and refine the proposal into a customised submission to suit their requirements
  • Submit the applications and negotiate hard for the best possible outcome;
  • Assist you and your team with documentation, settlement and moving your accounts