Asset Based Lending Facility for Steel Business Management Buyout

Asset-based lending (ABL) is a term generally reserved for asset refinancing solutions beyond the threshold of £1m.

When an asset finance deal reaches this point, lenders become much more flexible in looking at multiple assets, and multiple types of assets, that can be used towards a loan.

Stock, unpaid invoices, machinery and equipment, property, and much more can be combined into a comprehensive asset-based lending solution to provide you with a cost-effective and high value loan, from one lender, with clear repayment terms.

Here’s how it looks in practice.

The Scenario

We were recently approached by a steel business based in Wales, who were looking to raise £1.3m to buy out two retiring Directors of the company.

This is a fairly common management buy out finance scenario – a business buying out a retiring shareholder.

However, a £1.3m loan requirement is fairly high for this type of transaction – and it’s rare that a business will have either the cash on hand for this, nor one single asset that can raise enough capital to secure the loan by itself.

The Solution

We ultimately arranged one line of finance from one lender for our client, secured against a combination of:

• Stock (this formed a large part of the security due to the type of business)
• Assets
• Invoices
• Trade debtors

And it even included some RSL (recovery loan scheme) they were eligible for.

For our clients, it meant a clean, clear and cost-effective solution to a complex capital raise.

And as we handled the application, negotiations, and processing of the loan, there was minimal administration and time-cost on their part.

Thier MBO could proceed on schedule, with the retiring Directors enjoying a smooth exit from the business.