Macro solutions for micro problems…
Pharmaceutical development and production might be big business, but at the coal face success is often measured – literally – in small measures.
Find out how Close Brothers Leasing, Specialist Finance helped their broker partner – Mill Wood Finance – secure the funding their customer needed to produce more niche products and open up new revenue streams…
Background
Two years ago, the customer faced a significant challenge - their legacy income lines were facing increased pricing and margin pressure from international competition. Their management recognised the need to adapt and while their old equipment could cope with traditional manufacturing methods, technology had moved on taking growth opportunities with it.
Opportunity
The customer understood their future lay in their ability to offer ‘value added’ services, combined with a newer, more modern, manufacturing capability.
Over time, their market had migrated toward new pharmaceuticals administered in ‘micro-doses’, a manufacturing process requiring new and specialised equipment.
The decision was made to invest in a brand new, state-of-the-art manufacturing facility comprising an entirely new building at substantial cost.
Solution
As with any new facility of this scale, it required significant investment and had a material impact on the balance sheet, including the sale and leaseback of a building. This made the underwriting assessment more complex and necessitated specialist underwriting knowledge, which is a particular skill of Close Brothers Leasing, Specialist Finance.
The team had to understand and validate the customer’s forecast assumptions to better understand the proposal’s risk profile.
“Working with the broker and the client, we were able to understand the business strategy; articulate and mitigate the risks in the proposal and recommend a Recovery Loan Scheme (RLS) backed funding offer,” explained Mike Campbell, Sales Manager, Close Brothers Leasing, Specialist Finance.
Structure and product
48-month term, RLS-backed, Sale and HP-back solution for a new tablet coater.
Outcome
The company now has a new revenue stream to sit alongside their current income and will continue to produce the more general drugs that don’t require micro gram dosages using their existing coating machinery.
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