CBL - Case study brochure

Specialist, structured finance solutions for Brokers, Introducers and Intermediaries

Close Brothers Leasing, Specialist Finance provides specialist, structured finance to UK-based medium to large-sized businesses who are looking to raise substantial funding, typically between £1m - £15m.

We support standard and non-standard transactions, working closely with our network of third-party introducers, specialist brokers and financial intermediaries to find the right solution for all situations.

Long history of operating in niche markets

Our highly experienced team provides finance options that are both solutions-led and tailored to the unique needs of our customers and their businesses.

Specialists in non-standard transactions

Market leader in formulating solutions for non-standard transactions, where a deeper knowledge of the asset plays a large part in understanding the customer’s unique needs and options.

Covenant-based lending solutions

We consider the health of a business rather than the value of an asset.

Our finance products:

• Hire Purchase

• Receivables Finance

• Finance Lease

• Refinance

For further information, please visit: www.close-leasing.co.uk

Case Study: Servers secured after borrowing appetite increased

Without additional finance, growth can by stymied and opportunities lost. Find out how we helped our broker partner – Technology Leasing – secure a critical credit line that meant their customer could secure a large contract…

Background

Technology Leasing’s customer was experiencing significant growth and had used mezzanine debt solutions (a hybrid of debt and equity financing that can be useful for growing businesses) to facilitate their expansion.

This resulted in the firm being unable to generate sufficient cash to service future debt commitments, with various large payments due in the coming months.

Opportunity

The customer needed 11 new servers to satisfy a new contract at a cost of a third of a million pounds.

Solution

Key to helping the customer was gaining a detailed understanding of their debt maturity profile (the dates at which final repayments were due on existing loans) and refinance strategy.

Following a thorough analysis of their cashflow forecasts - and an independently strong valuation of the business - we extended the amount we were willing to lend beyond the initial requirement and offer a credit line facility of half a million pounds.

Structure

36-month term, Finance Lease with credit line.

Outcome

The client quickly drew on the credit line, fully utilising the facility in less than three months.

Mike Campbell, Sales Manager of our Close Brothers Leasing, Specialist Finance team, said: “Steve Holdstock, who is the Managing Director of Technology Leasing, was delighted with our proactive approach to increase the requested facility and we are going to revisit a larger facility once short-term refinance has completed.”

Case Study: New Broker –New Business

Our Close Brothers Leasing, Specialist Finance team recently onboarded a new broker who has already successfully written their first deal with us. The broker was referred to the Close Brothers Leasing, Specialist Finance team by our Invoice Finance colleagues as part of our ‘One Close Brothers’ strategy where we collaborate and refer customers - with the intermediary’s permission - to other Close Brothers teams for potential new business opportunities.

Opportunity

The opportunity involved meeting with a new customer, who are specialists in their field, to:

• Understand the rationale for the investment in submersible surveying equipment (operating in UK waters)

• Their business model

• Their customer base

• The contracts they hold

The customer holds several contracts with exploration companies where they physically operate the asset, which is an important consideration for Close Brothers Leasing, Specialist Finance because it means the customer has full control over the submersible.

Together with the customer’s decades of experience and the knowledge that the asset can be tracked and operated by the customer meant we could quickly arrange the finance.

Solution

After valuing the asset, we created a structured deal where Close Brothers Leasing, Specialist Finance arranged for the funding of the asset on a Sales and Hire Purchase Back agreement with sight of the original supplier invoices and proof of payment.

Outcome

The feedback from the customer was very positive and they were impressed by the speed of response, from the initial meeting to completion.

Customer feedback on the agreed structure...

‘There were a number of impressive aspects to this deal. In addition to the speed at which the transaction was agreed, it was clear Close Brothers Leasing, Specialist Finance understood the asset, are willing to fund non-standard assets, and were willing to listen’.

Case Study: ‘Action’ called for film specialist customer!

The UK’s film industry is one of the largest and most vibrant in the world with global revenue of our films worth around £3bn every year. Find out how Close Brothers Leasing, Specialist Finance helped their customer secure significant funding to meet tight deadlines for high-profile films…

Background

Our client, a relatively new start business that specialises in the film and television production sector, was established by a highly experienced and credible team.

The opportunity was proposed by an existing introducer.

Opportunity

The firm had been awarded a high-profile supply contract with a subsidiary of a major film company and needed to borrow the funds very quickly, but they were finding it difficult to secure the funding.

The directors were asked to provide state-of-the-art film recording equipment on hire, which would help the film company deliver the major 36-month film contract, which had guaranteed payment milestones.

But, time was not on their side – tight filming schedules meant they required a committed credit facility to both order the various equipment and meet delivery slots and times.

Solution

We established an ex-situ (off site) value for the equipment from one of our panel of valuers,

which gave us the required confidence about potential resale value.

James Fletcher, Managing Director of the Close Brothers Leasing, Specialist Finance team, explained: “The real clincher was, after discussions with our customer and the film company, we were told we could take a charge over the contract between them, which guaranteed payment on a ‘hell or high water’ basis, and gave us the opportunity to better understand the strength of the film company, which is investment grade.”

In addition, the transaction was structured to match the supply contract, making it a three-year deal meaning they ran co-terminus (a lease that terminates at the same time as another lease).

Structure

• £4.3m Hire Purchase deal

• 36-month term

• Charge over their supply contract

• First ranking debenture over the business

Outcome

The businesses have gone from strength to strength - our client was able to successfully fulfil their commitment to the film company and benefit from a highly profitable contract.

Case Study: Cash still king in £10 million+ Hire Purchase deal

Cash’s obituary has been written many times, but in many sectors – including property development - cash really still is king. Find out how Close Brothers Leasing, Specialist Finance and their broker partner worked together to secure a customer a large cash sum raised against their extensive car collection…

Background

Our client is a property developer and classed as a ‘high-net-worth individual’ who was referred to us by a new introducer.

Opportunity

Having readily available cash is critical for property developers because it allows them to respond quickly to opportunities in the market.

To enable this agility, they were looking to raise cash – north of £10m - against part of their extensive car collection to reinvest into property purchases, with security coming from part of their unencumbered car collection.

Solution

On the face of it, this would appear to be a straightforward deal to put together, but the large amount requested, and the eye-wateringly high value of the vehicles made it a challenge.

We understood that the keys to approval were to understand the client’s true worth and their level of liquidity to ensure that serviceability could be proven. This is not an easy task with high-net-worth clients who operate in multiple jurisdictions and often have complex corporate and tax structures in place.

In addition, the vehicles had to be independently

valued and with only three vehicles offered as security, we negotiated for a greater mix to broaden our security reliance.

A common discussion point is valuation - we rely on a long lead time auction perspective, which can differ significantly from the price a client puts on their assets.

To reach an agreement requires a great deal of calm, understanding and explanation from all parties.

Structure

• A fully amortising Hire Purchase deal with 12 months initial interest-only

• Secured against four vehicles

• 60-month term

Outcome

Fully drawn down facility worth over £10m that was delivered in line with the client’s tight timescales, cementing 12 months of hard work and leading to further opportunities in the future.

Ross Appleby, Sales Manager: “This was a very pleasing outcome for all parties and clearly demonstrates the appetite and ability of the Close Brothers Leasing, Specialist Finance team to deliver asset finance facilities in excess of £15m in the current challenging environment.”

Case Study: Recreational vehicle rental customer

A culture of collaboration, teamwork, and hard work between teams in a business as diverse as Close Brothers is critical to its success. This culture was much in evidence when our Close Brothers Leasing, Specialist Finance and Close Brothers Commercial Finance teams worked together to help a large recreational vehicle rental customer during a period of significant growth.

Company Background

Our customer is a recreational vehicle rental company with a large fleet of vehicles distributed across various countries, including Italy, Netherlands and the UK.

Opportunity

Our customer needed to finance 27 recreational vehicles in the UK and a further 20 in Ireland. To facilitate this, Jonathan Barrett, Close Brothers Leasing, Specialist Finance Sales Manager, met with his colleague, Patrick Barry, Sales Director, in Close Brothers’ Ireland business.

Solution

Together, the two teams set about working on an agreement that fully met the customer’s requirements, quickly agreeing a deal over 19 months with a balloon for a solid asset, in this case the recreational vehicles, which depreciate slowly and where demand outstrips supply.

“We were able to leverage the capabilities of our Ireland business because our customer did not have a funding partner in Ireland,” explained Jonathan.

Patrick Barry added: “The existing relationship Close Brothers had with the client in the UK,

gave us great comfort in supporting our part of the lend in Ireland. This ensured we balanced the portfolio and spread our risk across both countries.”

Outcome

With Covid restrictions in place at the time, the team analysed our customer’s forward bookings for the UK and Ireland, where families could travel in ‘bubbles’ meaning it was the perfect way to take a holiday and restrict contact with people outside of the ‘bubble’.

The model also worked because bookings were for UK and Ireland residents travelling within their respective countries.

In a subsequent development, an additional facility was written for 12 recreational vans.

What the teams said...

“The project involved collaboration, teamwork and several meetings with the customer to establish our understanding of the recreational vehicle rental market in the UK and Ireland. This approach secured the business, with positive feedback from the customer who have an interest in writing more business with Close Brothers in both the UK and Ireland.”

Case Study: 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

Case Study: Close Brothers Leasing, Specialist Finance aid

Satellite Finance in securing funding for their customer

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.”