Term Loan

In December, Hermes was asked to fund a mining services business with a funding requirement of $6 million, comprising $4 million in term debt and $2 million in debtor finance, for a 12-month period over which time the business would be “turned around”. Hermes applies three key criteria when assessing a funding opportunity, as this month’s case study illustrates. The three criteria can be summed up in three words: wheelhouse, security and runway.

An engineering business had accumulated a $1,050,000 tax debt as a result of rapid growth in the civil infrastructure sector. This became a problem when the client needed to show equipment lenders a clear portal for further equipment purchases that needed financing. 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.

The assets of a printing services/manufacturing business came onto the market after the business failed. The daughter of a well established printing proprietor became aware of the opportunity to acquire the assets and start a business of her own. She had grown up with printing and had a good network of industry contacts who could support her in her new venture.

A regional transport business encountered a shortage of cashflow after they discovered that their accountant had not been correctly accounting to the ATO.

How does a mining services business (extraction optimisation) buy time time to restructure its cost base without entering into Voluntary Administrations?