- Client: Care home operator
- Loan: £16 million
- Term: 18 months with rolled-up interest
Enness was approached by an established care home operator facing a significant refinancing challenge after completing the construction of two new care homes. Their development finance had reached the end of its term, but they had been unable to secure replacement funding, leaving the business facing the possibility of a forced sale.
The timing created considerable pressure. The operator had only a limited trading history from the newly completed care homes, while independent Care Quality Commission reports had returned below-target ratings. These factors made the refinancing more difficult, as lenders needed to understand both the financial position of the business and the prospects for stabilising and improving the newly established care homes.
Given the urgency of the situation, Enness needed to identify a lender that could assess the wider circumstances and provide funding within a timeframe that would prevent the operator from being forced into a sale. The limited trading history and substandard care ratings meant that a conventional lending approach was unlikely to provide the flexibility required.
Enness structured a bespoke financing solution designed to address the operator’s immediate funding requirements while providing sufficient time to improve the performance of the care homes. A net loan of £16 million was secured, with the facility structured over an 18-month period.
Importantly, the interest was rolled up over the term rather than requiring the operator to make immediate interest payments. This reduced the short-term pressure on the business and allowed the available cash flow to be directed towards stabilising operations and improving the care homes.
The additional liquidity provided the operator with the time and financial capacity required to address the issues affecting the care homes and work towards improving their ratings. It also provided a route away from the immediate threat of a forced sale and gave the established business an opportunity to stabilise its operations.
This case demonstrates how specialist finance can provide a potential solution when a business is facing a time-sensitive refinancing requirement alongside operational challenges. By considering the wider circumstances rather than relying solely on limited trading history, Enness was able to structure a significant facility around the operator’s immediate requirements.
If your business is approaching the end of an existing facility or facing challenges securing replacement finance, speak to a corporate finance specialist to discuss your circumstances.
Risk Warning:
Business finance carries risks. Borrowers should ensure that facilities remain affordable and that a realistic repayment or exit strategy is in place. Where finance is secured against assets, failure to meet the terms of the facility could result in enforcement action against the relevant security.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal or tax advice. Finance is subject to status, underwriting 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.
