How a distribution company is able to increase liquidity with structured solutions

Updated: Apr 6

Client is an established local SME in the food services industry. They needed additional liquidity to grow their business.



Challenges


Although the client’s current operation is profitable with positive cash flow; the company has significant amount of debt maturing within a year. At the same time, the client needs significant amount of liquidity to sustain and expand operations.


Actions & Solutions


We reviewed their financial statements, available assets and existing banking facilities. As a result of our analysis, we uncovered that the client (i) is not able to fully leverage the property’s new valuation to extract liquidity; (ii) face challenges in optimally using their banking and financing facilities (e.g. their supplier needed SGD 1.0m Bank Guarantee but its current bankers only offer a ~ SGD 200-300k facility per bank and (iii) unable to find suitable receivables financing (e.g. : Insurers and existing financing service providers only offer solutions for select buyer groups)

Client engaged CCRFinance as an advisor and in-house CFO / Treasurer to rationalise balance sheet, develop and execute financing solutions. We provided a comprehensive financial plan that would support the business sustainably covering the following:

  1. Renegotiate with existing banker and engage new financiers for the property

  2. Develop a portfolio solution using insurance (and whole turnover receivables financing) to finance the growing pool of receivables

  3. Structure for a fronting bank on the bank Guarantee, with risk participation from the other BG bank providers

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