Transaction Date: July 2007
Amount: £1.4m

This steel pressing company, based in the West Midlands, had been trading for over 15 years.  In 2006 it had turnover of £12m and employed 40 staff.  The company was funded by an invoice discounting facility. 

Early in 2007 product became infected resulting in the contamination of batches of steel that had been delivered to customers.  Large quantities of steel were returned and the company had no choice but to reform the product to the correct specifications.  In addition, the contaminated steel had allegedly damaged customers’ machinery resulting in counterclaims for damages.

By the summer of the 2007 the extra costs incurred and counterclaims for damages resulted in cashflow difficulties and an increase in debts to key suppliers and the Crown.  The Asset Based Lender received notification of the worsening position. They appointed an independent firm of accountants to carry out a business review on the status of the company. The accountants recommended that the Asset Based Lender appoint Administrators at the earliest opportunity.

At the same time, the Asset Based Lender approached Cable Finance to seek an alternative to Administration. Following urgent meetings with the Board of Directors and the advising accountants, Cable Finance concluded that the survival of the company could be possible with a financial restructuring coupled to further financial support and cost cutting measures.

Cable Finance agreed to the refinancing and provided sufficient facilities to the company to repay the Asset Based Lender in full and assured the survival of the business following a restructuring.

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