23 Jan Case Studies January 2014
To launch into the New Year, let’s draw upon the motivation of some astute businesses who pro-actively sought and executed improved funding platforms for their businesses. Please take the time to read the latest Robinson Sewell Partners’ report on how the following three businesses achieved financial coups for their respective enterprise which will translate into a more profitable FY14.
CASE STUDY 1
Client Position: Funding Risk
Deal started in March 2013 when the client received a finance offer from an alternative bank for a $5,700,000 agribusiness facility. RSP were asked to review the offer, which while fair on a pricing basis, had security provisions and loan covenants adverse to the clients business. This would then create an element of funding risk to the client for their mixed farming operation. On the back of this advice RSP was then engaged by the client to identify a better finance solution.
RSP conducted a full credit analysis of the business, represented and mitigated the client’s funding position and project managed the financer tender. The result of the RSP tender process was successful with an offer made by an alternative bank that included competitive pricing (a saving of $50,000pa), excluded security over some assets required by other lenders, and had standard loan covenants only. The client also now has access to a dynamic and well-resourced relationship manager.
CASE STUDY 2
Client Position: Cost Savings
A mixed farming client was dissatisfied with the service and lack of understanding from their existing bank supporting an $18,000,000 agribusiness facility and was seeking an alternative lender to meet those needs. Given the size and the quantum of the business, necessary action was required to ensure that there was funding stability and economic efficiencies from their banking arrangements. RSP was formally engaged to project manage this specialised process.
RSP completed a comprehensive assessment of the business and created clarity around the credit profile of the opportunity. RSP then initiated a finance tender process, which also included the existing bank. The existing bank acknowledged the current poor level of service, and offered to transfer the clients account to an agribusiness team better resourced and located closer to the client. Under the tender process framework the existing bank also offered a more competitive loan structure and reduced pricing (saving the client $300,000 pa), and ended up displaying a greater understanding of the client’s business and locational characteristics than the client expected, and against that of the other banks. In summary, the client ended up staying with the existing bank, while at the same time achieving significant interest and fee savings, and access to a more dynamic relationship team.
CASE STUDY 3
Client Position: Speed to Market
A client was seeking to refinance their existing agribusiness debt and more importantly settle on a commercial property recently purchased with time being a critical factor. Given the client’s expertise falls outside of commercial finance presentation and negotiations, the client engaged RSP to complete the transaction.
RSP understood the client’s requirements and accelerated all measures to achieve the funding milestone. Given RSP’s representation in the market, RSP streamlined the process whereby the client received a formal Letter of Offer within 2 weeks from RSP’s engagement. The offer was accepted, the refinance and settlement went through with great efficiency.
Look forward to hearing from you in FY14…
Ian Robinson & Brad Sewell
Directors – Agri & Commercial Finance
Mobile: 0448 697 674
Mobile: 0427 390 016
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