Refinancing when mainstream lenders are not an option

Industry: Civil Engineering & Quarry Operator

Business Stage: Merger & Aquisition 

Funding: $3,000,000

Background

A Melbourne commercial finance broker had a client in civil engineering who needed to raise capital in order to merge his business with that of a retiring quarry operator. Complications included the need to refinance equipment financiers in one of the entities (who’s equipment financiers had run out of patience) as well as the need to find working capital for the merged entity moving forward as it took on new contracts.

Main stream lenders were averse to the funding requirement ($3M all up) because
(a) of the credit history of one of the merging entities and
(b) the new merged entity being considered a start up

Knowing Hermes approach to assessing credit, the broker took the requirement to Hermes on the basis that all Hermes criteria were met:

✅The borrower was a trading business with a requirement for $3M;
✅There was adequate security to cover $3M when a combination of debtors, equipment (yellow goods at auction value) and property equity (on a second mortgage basis)
✅$3M was demonstrated to be sufficient to refinance the equipment required in the new venture AND to provide ongoing working capital;
✅Financial forecasts demonstrated a realistic capability for the business to service $3M.

Hermes Solution

Hermes structured two facilities:
A term loan structured over 5 years to accommodate the finance;
An invoice finance facility to meet the needs of ongoing working capital;
An additional limit of $500,000 to be available in the future to finance new equipment (likely second hand) as required.

We believe in working together with our partners to ensure a successful solution for our client. In this case the broker assisted Hermes to complete its due diligence by rounding up data and in the meantime managed the stakeholders – in this case including the agitating equipment financiers.