Transaction Date: January 2009
Amount: £1.6m

This building materials distributor, based in Manchester with branches in Newcastle and Birmingham, had been trading for over 20 years and in 2007 had turnover of £18m and employed over 40 staff.  The company was funded by an invoice discounting facility.

During 2007/2008 the company expanded into non-core activities which led to a reduction in profitability combined with increased costs. This adversely affected the cashflow and arrears to trade creditors and the Crown built up.

An Insolvency Practitioner was advising the Directors and believed that with additional time he could negotiate a sale of the business to a third party which could save jobs and enhance recoveries.  He approached the Asset Based Lender to set out his strategy but was rejected as he was not on the panel and they immediately instructed a panel member to carry out an Independent Business Review.

Cable Finance was approached by the Insolvency Practitioner who advised that a meeting had been scheduled for the following afternoon with the Board of Directors to include the Asset Based Lender’s choice of Insolvency Practitioner. The Directors expected that the meeting would result in the Asset Based Lender appointing their chosen Insolvency Practitioner to be Administrators.

Cable Finance met with the Directors the next morning and simultaneously carried out due diligence on the sales ledger. With that information to hand, Cable Finance was able to confirm at the meeting that it was willing to immediately provide £1.6m to pay off the Asset Based Lender. The Asset Based Lender agreed to the proposal and the refinance took place within a matter of days. Subsequently Cable Finance agreed for the company to be placed into Administration.

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