U.K.'s Largest Asset-Based Loan Requires Moving Target Analysis; 100 Million Euros in Debt Financing Secured
Client: International Motor Car Company
Challenge: Value Inventory Stored and Used in Worldwide Distribution Network with Retention of Title Issues
A widely recognized British maker of fine cars owned a company in London that manufactures and distributes worldwide more than 300,000 types of replacement parts. The parts categories were so numerous because many of the company's automobiles are collectible classic cars, some dating back to company's launch in the 1930s. The company needed an asset-based loan of €100 million for debt financing, or about $130 million (U.S.). The company worked with a syndicate for the financing, and the syndicate's lead lenders engaged AccuVal to appraise the inventory so it could secure financing of what would become the largest asset-based loan in the United Kingdom. The assignment had a number of challenges. European asset-based lenders typically are more conservative than in the United States, so companies secure less value for collateral than they might in the U.S. In addition, the parts inventory was not housed only in the U.K but in many other countries throughout the world, including Russia. Knowledge of liquidation practices and bankruptcy laws in multiple countries was necessary to properly value the collateral. Third, some parts were in high demand and thus frequently in transit; others were slow-moving because of limited demand, especially for older vehicles.
AccuVal Approach
Because of the difficulties of accurately monitoring parts that varied so widely in demand and that were so frequently in transit, no one – including the lenders – was confident about the likelihood of securing financing using the parts as collateral. AccuVal, however, was able to analyze demand for the 300,000 parts by applying an unusual combination of experience.
Bottom Line: Inventory Valued at $300 Million, Easily Securing $100 Million Loan
Using our knowledge of both international asset-based lending transactions and the global automotive aftermarket, AccuVal provided the lenders with a list of inventory accounting system reports that substantiated its findings of an inventory gross value of €300 million, or three times the amount sought in funding the debt. The lenders readily approved the €100 million bid for debt financing.
The AccuVal AdVantage™
A global reputation for asset-based lending. Experience with the international automotive aftermarket business. The ability to adapt to unusual business situations and find innovative solutions, even to moving targets. A name recognized by international investors, money-center banks, venture capitalists and financial syndicators. That's The AccuVal AdVantage™ at work.
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