Case Studies

Client: A leading European provider of supply chain solutions

The client is a leading logistics company that operates in the UK and continental Europe providing supply chain solutions for leading worldwide companies as well as some of the largest companies in the UK. As well as operating many heavy good vehicles and trailers, the company also operates distribution centres for the underlying customers.

On a regular basis, Ibex Finance assists with the operating lease financing for the commercial vehicles and trailers, whereby financing can be provided as a competitive alternative to the customer’s relationship banks, and all other equipment types.

One particular transaction was for the equipment costing £3 million, including the racking and sprinkler systems and IT, within one of the largest distribution centres used by the company for a world leading food manufacturer. The rationale for the transaction was ‘off balance-sheet’ financing to enable the company to achieve its net debt forecast by the year-end, by injecting cash back into the business.

With experience and knowledge of the market a suitable financing partner, a subsidiary of a leading European bank, was identified by Ibex Finance to take the residual risk required acceptable to the company’s auditors. The transaction was structured by Ibex Finance over a 7 year term, which included the negotiation of an acceptable margin for both the customer and the bank. The credit proposal outlining the structure and residual risk mitigants was presented to the bank by Ibex Finance, which included details of the underlying customer of the company for which the distribution centre is used. The bank subsequently agreed to take a suitable residual position in the racking to enable the transaction to qualify as an operating lease and enable the company to achieve its financial objectives.

The transaction gives an example of Ibex Finance using its structuring capability and knowledge of the asset finance market to identify the most suitable bank to achieve a Corporate client’s financial objectives, whilst not affecting their operational objectives.

Client: A world leading food manufacturer

Having arranged several hire purchase transactions on roll cages for a major retailer in the UK, the Supplier of the equipment approached Ibex Finance with an opportunity to structure the financing of similar equipment for a potential customer, a world leading food manufacturer.

To enable the sale of the equipment to go ahead, the asset financing had to achieve operating lease status under US accounting treatment and rentals that would give significant cost savings compared to the existing rental arrangement that the Supplier could offer.

With knowledge of the accounting treatment, Ibex Finance proposed a structure to the customer, which was subsequently approved at a senior level to take the transaction forward. Ibex Finance identified a suitable European bank that would take the required residual position and achieve the financial objectives of the customer. Having ascertained detailed information on the customer’s manufacturing and distribution processes, a full proposal was submitted to the bank together with financial information. The transaction together with the residual risk to achieve the customer’s objectives, was subsequently approved.

Upon forwarding the lease documentation to the customer’s legal department, Ibex Finance assisted in tailoring the documentation with detailed negotiations between the customer and the bank to close the transaction and achieve the objectives of all the parties.

The transaction enabled the supplier to sell the equipment into a new market to a new customer.

Client: The UK subsidiary of a major European transportation company

Having grown by acquisition to become one of the largest transportation companies in the UK, the client had acquired many asset finance agreements for all different types of vehicles and equipment all which had been written in the name of the acquired companies. The agreements were a mixture of operating leases, finance leases and hire purchase agreements with many different Lessors.

Ibex Finance was engaged to review and evaluate the existing asset finance agreements and where possible negotiate alternative cost effective solutions at the end of lease, re-negotiate unfavourable existing lease obligations and manage all new and existing leases throughout their life on an on-going basis including notifying the client of the notice period such as for returns and negotiating extension rentals where required. This included notifying the Lessors of the new name of the companies they had contracted with as well as the change of ownership of the companies.

This involved liaising with the Lessors for all the relevant information with regard to the lease agreements, listing them on an internet based system for access by the client as a single point of information for all data and tracking and providing continuing support and advice for the administration of the lease agreements.

It was identified by Ibex Finance that a number of the leases had gone beyond the expiry of the minimum term including one lease that had almost gone three times the period of the minimum term, which were unnecessary additional costs for the client. As Ibex Finance has strong relationships with a number of the Lessors, we were able to negotiate the termination of many leases for a nominal sum and in some cases such as the lease that had continued for three times the original minimum period received many payments back for the client.

Ibex Finance also arranged for the novation of the asset finance agreements into the name of the relevant client company from the name of the companies that had been acquired. This required a credit application and explanation of the new company operating in the UK, thus avoiding any default as the asset finance agreements have material change of ownership clauses.

The management by Ibex Finance of the portfolio of leases enabled the client to have a central point of contact for all lease agreements for the vehicles and equipment, avoid paying unnecessary additional lease rentals with the lease agreements being in the correct company name.