Hermes Capital provides asset-based funding to business with out-of-the-box requirements – nearly always in “special situations”.
The capital Hermes provides comes with the right structure, in the right quantity and at the right time to give our clients the decisive fire power they need to achieve their goals.
Our funding mandate is to provide debtor finance plus term loans secured by equipment and property for broader funding requirements.
“Special situations” include turnarounds, high growth, acquisitions, and – as this month’s case demonstrates – recapitalisation of businesses that are “re-booting”.
A “Special” Transitional Case
Recently, a mining services business dealing with the wet & dry hire of equipment encountered setbacks in the mobilisation of large contracts, after the fleet had been largely either mothballed or retrenched.
Despite the long-standing business being historically successful, recent financial data indicated a lack of serviceability – bringing the business to a standstill.
The need for funding new equipment, re-certification of mothballed equipment and further working capital was apparent, with a total funding requirement estimated for $1M.
The gap in the market for commercial finance
In this particular case, banks were unable to contemplate requests for funding against existing equipment given the lack of serviceability based on recent years data.
The client had the assets – in equipment, as well as bank mortgaged property with little headroom – to support the level of funding required. Furthermore, the projected pipeline and overall projections evidenced viability in the re-booted business moving forward.
Regardless, there was a large gap in the market for a common-sense approach to financial analysis, particularly where a client has the assets to support funding requirements.
Asset-Based Lending Solution
The broker identified early in the process that, given the current banking requirements, traditional financiers would not be suitable. Furthermore, the quantum of funds and lender expertise required to support the business through the challenges it would face “ramping up” ruled out FinTech style options.
Hermes reviewed the client’s debtors as well as their other available assets, including a number of unencumbered heavy equipment items and some property with second mortgage equity. Following a further evaluation of circumstances for the business including its long-standing success rate, a “Capital Maximiser” facility was structured (Hermes’ signature offering), combining a $600K term loan facility with a $400K debtor finance facility to provide forward liquidity.
Ultimately, this facility would meet the immediate capital needs of the business and aid its rapid growth and return to prosperity.
The business is in the early stages of mobilisation with equipment on-site and working.
As the needs of the major mining industry players grow, so too will the opportunities for this business, which is now placed to make the most of them.