£14.3M Commercial Bridging Facility Rebuilt Mid-Deal After Price Reduction

An offshore corporate buyer engaged Enness Global to arrange acquisition finance for a commercial building in the UK. Indicative terms had been agreed with a specialist bridging lender, the purchase price had been settled and the seller had granted a period of exclusivity.

The transaction was progressing towards completion when the buyer and vendor agreed to reduce the purchase price. While this represented a lower acquisition cost for the buyer, it meant that the original financing figures needed to be reviewed before the transaction could proceed.

For a high-value commercial acquisition, changes to the purchase price can affect more than the amount being borrowed. The loan size, required equity contribution and any fees calculated as a percentage of the facility may all need to be reassessed against the lender's terms.

The original indicative facility had been calculated using the agreed purchase price and the lender's loan-to-value limits. Once the price changed, the figures no longer reflected the transaction being presented to the lender.

• The facility needed recalculating: The revised purchase price affected the amount that could be borrowed within the lender's LTV limits. The buyer's required equity contribution and any percentage-based fees also needed to be updated.
• The exclusivity period was already running: The transaction was subject to a defined exclusivity period. The revised figures needed to be returned to the lender promptly so that the financing position could be reassessed while the period remained in place.

The key was to ensure that the lender was considering the revised transaction rather than relying on figures that no longer matched the agreed purchase price.

Enness rebuilt the facility calculations using the revised purchase price and returned the updated figures to the specialist lender for written confirmation. The work focused on three areas:

1. Recalculated the facility: The loan was resized to approximately £14.3m against the revised purchase price, within the lender's stated LTV limits of approximately 75% to 77%. The client's equity requirement and percentage-based fees were also updated.
2. Kept the lender's requirements in view: The revised figures were prepared in line with the lender's existing requirements for an offshore corporate borrower, reflecting the structure already presented for assessment.
3. Resubmitted during the exclusivity period: Enness returned the revised facility calculations to the lender while the exclusivity period was still running, allowing the lender to consider the amended transaction.

For further information about this type of funding, see Enness Global's guide to commercial bridging finance and its wider commercial and development finance solutions.

The revised terms have been submitted to the lender and are awaiting written confirmation. Nothing is agreed until that confirmation is received, and the transaction has not completed.

The lower purchase price also meant a smaller facility for the buyer. The final lending position remains dependent on the lender's approval of the revised figures and any further conditions it may impose.

This case demonstrates why indicative terms need to be revisited when the underlying transaction changes. A purchase price reduction can affect the loan amount, the buyer's equity contribution and associated fees. Each figure needs to be checked against the lender's limits before the revised terms can be relied upon.