Case Study: Transport

Client & Objective:
A second generation freight and transport services provider operating a fleet of transport trucks and trailers of varying configuration, size, age, and class. The client was looking to manage succession within the family group with one sibling taking over the business, and the others receiving financial remuneration for their exit. Having exhibited the “right” lending behaviour for decades beforehand through fast debt amortization, the fleet of assets had equity which was locked up within the business.To complicate matters further, management established a second business that had been trading for less than 12 months as at the time of the credit application.

Requirement:
Faced with the prospect of needing to sell assets and scale back operations to fund the requirement, HT Capital were able to assist with structuring of approximately $5m of commercial lending limits to fund both the succession and the transitional working capital requirement of the business. The incoming owners didn’t have hard property asset security available, so the transaction was structured exclusively against the retained equity within the fleet. A forward-looking income assessment was also required as there was reliance on the new business’ income to appropriately satisfy overall debt servicing capacity requirements.

Solution:
Through a deep understanding of the client, their industry, asset type, and the cashflow profile of the group, HT Capital were able to successful structure and negotiate $5m in commercial lending limits apportioned across term debt, asset finance, and overdraft facilities. The increase in lending was carefully weighed with overall debt servicing capacity of the group, and the increased repayments on the new lending was offset with a restructure of existing lending arrangements, thereby fully negating the cashflow impost to the business. A well-structured and organised credit and fulfilment process was fundamental to the application as collateral requirements involved over 100 individual assets.