Market Tender & New Funding for Growth
$20.5m Commercial Facilities
Service
Business & Corporate Finance, Debt Advisory, Market Tender
Funding Amount
$20.5m
Funding Purpose
Refinance + New Funding including Construction Funding
Industry
Manufacturing
The Scope
- The rapidly rising interest rate environment caused our client to consider reviewing not only their interest rate costs, but also their debt structure, debt capacity, facility mix and lender appetite for future funding.
- The clients were keen to ensure they had appropriate funding lines for planned growth but also headroom to capitalize on future M & A activity and planned extensive property renovations.
- In conjunction with reviewing the existing $14.5m in funding lines, a primary objective was to partner with a financier equipped with both appetite and capability to leverage strong EBITDA to facilitate acquisitions and property renovations.
- We recommended a formal market tender to determine current & future market appetite, and also to maximize the competitive tension within the mid-market and corporate banking relationships we hold.
- Nexus was engaged to manage the whole tender & debt exploration process including selecting financiers, presenting funding requests, managing pricing & structure negotiations and assisting with closing the transaction.
What We Did
- Working closely with both the client and their accountant, Nexus prepared a comprehensive information memorandum illustrating the strength of the business and highlighting the aspects we know bankers and credit executives want to know.
- Completed detailed debt servicing modelling & analysis including Group consolidation, debt capacity, cash flow leverage, working capital cycle and EBITDA to Free Cash Flow calculations.
- Prepared high-level Enterprise Value estimations taking into account all of the Obligor Group’s Assets & Liabilities.
- Compiled a detailed dashboard for the client to review which summarized all key details of each Offer, the pros and cons, comparisons to existing finance arrangements and our recommendations.
The Result
- We received three credit-endorsed Term Sheets from Banks with the selected financier issuing their Term Sheet in 2.5 weeks.
- Revised funding package of $20.5m in funding lines including +$5m in new facilities.
- The selected Offer provided over $2.75m in additional approved funding (including Term Debt, Working Capital & Asset Finance Limits) plus an additional $2.25m pre-approval for future property renovations with no additional equity or security requirement.
- Undertaking the tender process led by Nexus has delivered the client cash flow savings of over $1.15m p.a. through $1m in reduced principal repayments and an additional $150k in interest savings.
- The client now has an appropriate funding mix for their short to medium-term growth aspirations, appetite to capitalize on opportunistic acquisitions, and in the process has injected over $1m of cash flow back into the business.
