£1.35m Hire Purchase Refinance Revitalizes Cash Flow for Logistics Business

Case Summary:

A 103-year-old, family-owned logistics business faced cash flow challenges due to excessive short-term debt and increasing creditor pressure. FBX Capital partnered with Praetura Asset Finance to structure a £1.35m hire purchase refinance, reducing monthly payments by over 50%, boosting free cash flow, and providing the working capital needed to stabilize operations.

Background:

Established over a century ago, the client has long been a trusted name in the logistics industry. Operating in a sector characterized by tight margins and high operational costs, the company’s financial stability was critical to maintaining its reputation and service levels.

Over time, the accumulation of short-term debt began to strain their finances. Mounting creditor pressure further compounded the problem, leaving the business in need of an effective strategy to address its financial challenges and protect its legacy.

The Problem:

The logistics company was grappling with significant cash flow issues caused by an overreliance on short-term debt. The burden of high monthly payments created financial strain, limiting their ability to manage operational costs and meet creditor demands.

Without intervention, the situation risked escalating into severe financial distress. The company needed a solution to restructure its debt, reduce financial pressure, and secure the liquidity required to stabilize and grow.

The Solution:

FBX Capital worked closely with the client and Praetura Asset Finance to design and implement a tailored hire purchase refinance facility. The £1.35m facility focused on refinancing the company’s trucks and trailers, a critical component of their operations.

By extending repayment terms and securing more favorable rates, the refinance reduced monthly instalments by more than 50%. This significantly alleviated cash flow constraints and provided the additional working capital necessary to address immediate financial challenges and support ongoing operations.

Asset-Based Lending offered several benefits, including:

Reduced Financial Burden: Monthly instalments were cut by over 50%, easing cash flow pressures.
Increased Liquidity: Additional working capital enabled the client to stabilize and invest in critical areas.
Targeted Asset Management: The refinance leveraged existing trucks and trailers, optimizing their financial utility.
Enhanced Creditor Relations: Improved cash flow allowed the client to manage creditor obligations more effectively.

The Outcome:

The £1.35m hire purchase refinance provided a lifeline for the logistics business. By reducing monthly payments and freeing up cash flow, the company regained financial stability and alleviated creditor pressure.

The additional liquidity positioned the business to focus on operational improvements and long-term growth, ensuring they remain a cornerstone of the logistics industry for years to come.

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