Trade Finance case studies

The Requirement: The business was facing administration following a family dispute and the non-family management wanted to complete an MBO, potentially from the administrator. However, they could not raise sufficient funds to complete the MBO and ensure that there was sufficient headroom in the company’s forecast going forward.

Trade Finance Solution: A trade finance company sanctioned the transaction either through a pre-pack route or via a corporate re-organisation which gave the client flexibility in their negotiations. In the event, insolvency was avoided with the trade finance company purchasing the company’s existing stock to facilitate the buyout of the 50% stake from the founding family, and also providing ad additional transactional trade finance facility to bolster working capital going forward.

The Trade Finance Difference: The trade finance company were flexible enough to give the client two distinct funding options, including the purchase of the business through a pre-pack if necessary and provided a facility which included a stock financing solutions alongside traditional trade finance.

Trade finance for a high-end fashion retailer selling very expensive outfits to an international customer base, mostly online.

Their Requirement: The client is a young but rapidly growing company and could not secure any credit terms or banking lines given it was less than 2 years old. Demand far outstripped supply and they required facilities to pay for apparel.

Trade Finance Solution: The trade finance company implemented a revolving credit facility to cover stock buying for each fashion season, making supplier payments direct on behalf of the client.

The Trade Finance Difference: High fashion goods, lack of customer orders and a requirement of over £1 million deterred most financiers, yet the trade finance company gained comfort on the recurring customer base, quality of management and the business.

Trade Finance for a  UK manufacturer of large capital equipment selling to major multinationals across the world.

Their Requirement: The client was manufacturing a large piece of machinery for an overseas buyer on a long term contract, but project overruns caused a working capital shortfall. They could not complete the plant without buying components, but could not afford them.

The Trade Finance Solution: The trade finance company purchased the relevant components from suppliers and sold them on to the client on credit terms, plus bought stock from the client and sold it back on credit, releasing much needed capital into the business to complete the project.

The Trade Finance Difference: Whilst the overall performance of the client was clearly important, the trade finance company focussed on the specific contract to be funded, the components, end customer and payment terms, to gain comfort and implement what some may not regard as trade finance.

Trade finance for an international group whose UK operations import high quality granite and marble for sales to installers and retailers.

Their requirement: The client had been through a significant turnaround and restructure, coming out in a stronger position. However, its funding lines were fully utilised, preventing them from trading at increased levels and fulfilling customer orders. The bank would not lend them more so their recovery was being stifled.

Trade Finance Solution: The trade finance company implemented a stock purchase facility around existing facilities, buying granite direct from suppliers and releasing to the client to fulfil specific customer orders under trust receipts.

The Trade Finance Difference: The trade finance company were not deterred by the high gearing or recent past, instead focussing on the present trading, specific customer orders, profitable trades and stock.