Operating Lease

Client: A leading European provider of supply chain solutions

Ibex Finance arranged ‘off balance sheet’ financing for a major UK and European based logistics company for racking and sprinkler systems within one of the largest multi-user distribution centres operated by the company. The rationale for the transaction was to enable the company to achieve its net debt forecasts by the year end.

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 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 customers of the company for which the multi user 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.

Hire Purchase

Client:A major high street retailer in the UK

Ibex Finance was given the opportunity to arrange financing of the capital expenditure requirements for the client, in the event whereby the proposed transaction would add value to the client through pricing offered and as an alternative to using the bank facilities in place.

Ibex Finance identified a suitable bank that was prepared to provide hire purchase finance at a very competitive margin over a 7 year term. The client has so far asked Ibex Finance to arrange the finance for its requirements of roll cages twice to date.

On both occasions Ibex Finance supplied the relevant information to the bank with details of the security package and underlying covenant for approval by the bank’s credit committee. The transaction was subsequently approved by the credit committee of the bank on the terms required by the client.

Having been awarded the transaction by the client having achieved their financial objectives, Ibex Finance negotiated all documentation to the satisfaction of both the client and bank and the transaction was subsequently completed for payment by the bank to the supplier of the equipment.

Finance Lease

Client: A leading food retailer

The client’s financing strategy is to lease a certain amount of equipment allowed within the covenants of the group’s banking facility, as the client has tax losses going forward. Ibex Finance was requested to provide a quote in competition to the client’s existing lessors and only approach banks that were not existing relationship banks. Ibex Finance identified that the lessor could claim enhanced capital allowances on the equipment and having sourced the most tax effective and competitive bank by obtaining several quotes, the term sheet was sent to the client. The transactions were awarded to Ibex Finance, who provided competitive financing to the client in competition to the existing relationship banks by identifying that the enhanced capital allowances were available.

Ibex Finance subsequently arranged credit facilities with two banks and negotiated all the documentation between both parties.

The transactions were subsequently completed adding value to the client by providing cost effective financing for the equipment through taking advantage of the enhanced capital allowances.

Vendor

Client: A world leading food manufacturer

Having arranged a hire purchase transaction 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 was in place.

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 bank that would take the required residual position and achieve the 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, which 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.