Close Brothers Leasing, Specialist Finance aid Satellite Finance in securing funding for their customer
The effects of the pandemic on balance sheets are still being felt today by countless firms across the UK, leaving them with debt issues that can be difficult to reconcile when seeking funding.
But, as a solutions-driven team, Close Brothers Leasing, Specialist Finance and their broker partner, Satellite Finance Limited, worked together to help a retail customer in need of mission-critical assets…
Company background
Our customer is a national retail chain with around 150 stores across the UK who use Electronic Point of Sale (EPOS) systems extensively. These machines are a combination of hardware and software designed to help businesses run more effectively. Where traditional till systems record sales, EPOS systems record transactional information and also generate detailed reports in response to the input data.
Opportunity
Our customer wanted to replace their existing EPOS estate with completely new systems in all their stores.
Because of the project nature of the roll-out, our customer required a committed credit facility and could not start the EPOS replacement without the comfort of knowing they had the funding in place to successfully complete it.
Solution
Following a series of buyouts and restructures, the business had a complex balance sheet with a few legacy debt issues. This meant it was not a straightforward credit underwrite for a few reasons – the inconsistent trading over the past few years; the complex balance sheet, along with the ‘soft’ nature of the assets and where they would be located.
The key to progressing the deal was gaining a detailed understanding of the ‘story’ and ‘covenant’ of the borrower.
Simply put, the borrower could not function without the EPOS systems, which are a mission-critical element of their business. By recognising this, we were happy with where they would be located - the ‘story’.
Additionally, after further investigation, we were able to get comfortable with the structure of the balance sheet and cashflows to demonstrate the ongoing viability of the business – the ‘covenant’.
By bridging the lack of asset security with a strong story and covenant, we were able to agree to a sensible funding structure which met the client’s requirements.
Deal structure
- Revolving credit facility for purchase of EPOS till systems
- Hire Purchase
- 36-month term
Outcome
There have been three drawdowns and we have enhanced relationships with both our broker partner, Satellite Finance Limited, and the supplier, with further opportunities being discussed.
Mike Campbell, Sales Manager, Close Brothers Leasing, Specialist Finance, said: “This deal is a very good example of a large soft asset transaction for critical assets the customer couldn’t trade without. We had to understand - and be satisfied with - a tough balance sheet, but because we’re solution-driven and comfortable with funding a wide range of assets, we knew we could find a deal that worked for everyone.
“We’re delighted to have worked with the team at Satellite Finance Limited to reach an outcome that resulted in the stores being upgraded with the vital new machines.”
Bernard Alderson, Sales Manager, Satellite Finance Limited, added: “This was not a straightforward deal, but getting to know the customer and understanding their challenges was vital in ensuring progress.
“We know the team at Close Brothers Leasing, Specialist Finance are specialists in their field who aren’t afraid of proposing bespoke deals, and it proved the case once again.
“We are delighted we could facilitate the funding of assets that will be a key part of a well-planned, upgrade of their estate and enable them to future-proof their business.”
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