Enness was approached by a business owner seeking a £10 million corporate finance package. The client wanted to refinance an existing £9 million facility that was no longer considered competitive, while also raising a further £1 million to strengthen the company’s cash flow and support future growth.
The client initially believed that a stock loan would be the most appropriate way to raise the required capital. Based on the value of the company’s stock and the amount being borrowed, the proposed facility would have represented approximately 50% loan-to-value. On the face of it, this appeared to provide a straightforward route to the liquidity required.
However, after reviewing the company’s wider financial position, assets and funding requirements, Enness identified that relying on a single form of security would not necessarily provide the most efficient solution. Instead, a combination of facilities secured against different aspects of the business could provide greater flexibility while allowing the client to refinance existing debt and access additional working capital.
Enness therefore structured a bespoke £10 million funding package comprising three separate facilities: a £5 million invoice finance facility, a £2.5 million revolving stock loan and a £2.5 million unsecured term loan. Together, these facilities provided the full amount required while allowing different forms of finance to be matched to the company’s individual requirements.
The structure effectively created a dual funding solution. The stock loan and unsecured term loan provided capital that could be used towards the company’s front-end requirements, including purchasing additional stock and taking advantage of the company’s ability to leverage those opportunities. The invoice finance facility provided a complementary back-end solution, helping address the existing refinancing requirement and supporting the company’s ongoing cash flow.
Rather than simply increasing the size of one existing facility, the multi-facility structure allowed the company to make more effective use of its available assets and borrowing capacity. It also provided greater flexibility around how the capital could be deployed, helping the client align different sources of finance with different stages of its working capital cycle.
This case demonstrates the importance of assessing the wider financial position of a business before determining the most appropriate corporate finance structure. A facility that appears logical based on one asset or borrowing requirement may not ultimately be the most efficient option once the company’s wider circumstances are considered.
For established businesses seeking to refinance existing facilities while raising additional working capital, a combination of finance solutions can sometimes provide a more effective structure than relying on a single source of funding. Enness can assess the overall requirements of a business and explore different lending structures to identify a solution aligned with its objectives, subject to lender criteria.
Risk Warning:
Corporate finance carries risks. Businesses may experience changes in cash flow, profitability, asset values or trading conditions that can affect their ability to meet repayment obligations. Failure to meet the terms of a finance facility may result in enforcement action or other consequences, depending on the structure and security provided.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting, due diligence and lender criteria. Terms and availability will vary depending on individual circumstances and the proposed transaction.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
