Hermes Capital have been in business for over 10 years and have built a reputation of assisting businesses undergoing some form of stress to “turn-around”.
We provided funding limits of between $500K to $10M and have the unique capacity to structure tough deals to fit within our investment mandate. Our Progress Claim Finance facility primarily assists companies within the construction, mining and civil sectors to fund unpaid customer claims.
This months’ case study demonstrates how Hermes fills the gap to provide funding for a construction company that had recently undergone a corporate restructure.
A “Special” Transitional Case
A demolition and excavation company found itself in financial trouble after 12 years in the business. The company had been growing organically, and outside of equipment finance, had never sourced any type of working capital facility. Unfortunately, in 2019, the company suffered their first full-year loss due to a major customer going into liquidation and, as a result, failing to pay their debts.
On advice from the company’s accountant, the business was placed into Voluntary Administration (VA) with a Deed of Company Arrangement (DOCA) drafted. The creditors and the ATO accepted the DOCA allowing for the business to be handed back to the director to continue trading. However, this was subject to the client obtaining finance to keep up their current and ongoing obligations.
The gap in the market for commercial finance
The introducer identified the complexities of this transaction based on recent events, but it was evident that the client had both a strong balance sheet and WIP to continue trading profitably moving forward.
Hermes was approached as a suitable funder for this scenario, as we are able to take into consideration both the outlook of the business, as well as the character of the client – both boxes ticked in this case.
Asset-Based Lending Solution
The introducer trusted Hermes to map out a solution that would work for both client and creditors through the DOCA process. With experience dealing in this space, the client allowed Hermes to negotiate terms to suit all stakeholders.
Hermes was able to raise $700,000 against outstanding progress claims (despite the impacts of the current crisis), with a small portion of the funding assisting with the DOCA, and the remainder for working capital purposes of the business.
In this revolving finance facility, the client also has the confidence to quote on a range of new contracts with the certainty of funding security.
The director has successfully taken back control over the company and has continued to fulfill its short-term obligations.
As we keep hearing from the Prime Minister, construction and infrastructure will be the sectors to pull Australia through the current climate, and the forecast for the client is promising.