R & E Finance - Case Studies

07885 202850 ! 0203 7909366 ! [email protected] ! www.refinanceuk.com ! 1 Berkeley Street, London,W1J 8DJR & E Finance is Authorised and Regulated by the Financial Conduct Authority.

Company Number 302663 ! Members of the Turnaround Management Association and the National Association of Commercial Finance Broker

R & E FinanceOur Services

Solutions For Specific Problems 2017



PRESENTATION The purpose of this document is to outline some of the services provided by R & E Finance. The list is not exhaustive as my colleagues and I have tried to create solutions to the specific situations your office will possibly encounter on a daily basis. The case studies and examples are based upon recent problems that have confronted clients introduced into this office. If you do have a client or situation not covered by the enclosed, feel free to contact myself, or my colleagues, to discuss how we can best help you to solve your clients problems. I hope the attached is of interest to you and I look forward to working with you. Thank you for your support.



CASHFLOW/WORKING CAPITAL

A professional buying into a practice partnership.

A professional buying out a partner. A General Practitioner needing funds to

refurbish his surgery. A seasonal hotel paying the annual tax bill. A firm of solicitors paying their annual

practice tax bill. A subcontracting builder under pressure

from the business bankers, needing 4 weeks wages whilst debtors paid outstanding invoices.

A restaurant wishing to refit their fixtures and fittings.

A manufacturer needing to pay his VAT bill. A developer needing £100,000 to complete

the purchase of a plot of land. A convenience store needing to purchase

stock as well as fixtures and fittings to expand his sales floor.

Revolving cash-flow facilities are available for a term of up to 3 years on an unsecured basis for a variety of purposes (examples):



PRIVATE FUNDING

Scenarios: Company/asset acquisition Bridging finance Liquidity/working capital requirement Turnaround and restructuring finance Refinancing

There are a host of private funds now available to help businesses when the high street banks are restricted. Such facilities are on an unsecured basis.

£0-£10m (sweet spot £200k-£4m) of new funding, typically debt structures i.e. not looking to take equity

Will also look at: 2nd and 3rd charge positions Term - up to 3 years Sectors: broad appetite Geography: Europe (mainly UK &

Ireland) Completion on facility draw down can

be arranged within 48 hours



REGIONAL FUNDS

Examples A newly qualified Barrister needed £12,500

on a term loan to buy into his Chambers. An Engineer was expanding at a great rate

and needed £40,000 for Working Capital. A software company had signed a very large

contract, which would not release funds for 3 months. A short-term facility of £20,000 to bridge the gap was approved and drawn down in days.

A sub-contracting builder with poor accounts and adverse credit needed £30,000 to buy materials to commence a lucrative contract.

A sub-contracting shop fitter liquidated his company due to the main contractor closing down. The major retailer offered to deal directly with the sub-contractor. A new company was set up to fulfil the contract and was funded by way of a regional fund.

A start up bistro/cafe needed £20,000 for fixtures and fittings.

A tenant of a business centre wished to buy the freehold of the multilet property, which had a restrictive Covenant within the Title. This made if difficult for High Street Banks to lend against, R & E Finance were able to find a solution for this problem.

There are a host of regional funds now available to help businesses when their own high street banks cannot. These facilities are typically arranged on an unsecured basis.



INSOLVENCYDuring the life of a business, it is possible that the business encounters a situation beyond the management's control. Such events can include: The cancellation of an order A payment dispute with a customer Non payment by a customer Illness of a Partner/Director Aggressive action by a creditor or bank

In such circumstances the management of the business may struggle to obtain positive advice from the usual people consulted. We at R & E Finance have many years experience of advising sole traders, partners and limited companies on how to survive in such trying circumstances and ensures business continues. Case studies follow:



INSOLVENCY (continued)A self-employed client had a large HMRC liability that resulted in a Bankruptcy Petition being issued. The client was due to inherit a third of a parent's house once Probate was concluded. However, HMRC would not wait. Unfortunately the client could not demonstrate serviceability for a re-mortgage. Therefore, this office arranged a second charge bridge secured on the client's house without demonstrating income to discharge the Bankruptcy Petition. The bridge was arranged whereby the interest was rolled up and no monthly payments were necessary. Once Probate was concluded, the bridging loan was discharged.

Case Study 1A company Director approached this office and advised that his company was in a CVA. The request was to raise £160,000 to discharge the CVA by way of variation and release Working Capital to grow the business. We were advised that the company accounts did not show very good profits. Subsequently a facility was arranged for the company to borrow the monies without demonstrating income and secured on a residential property even though the property was in a Trust.

Case Study 2

A construction company went into liquidation as a result of receiving poor advice. Subsequently this exposed the company officers to liability under their Personal Guarantees. The introducing banker requested assistance from this office. After obtaining Counsel’s opinion, the Liquidator was approached and funds were raised allowing the liquidation to be reversed.

Case Study 3 A client was a discharged bankrupt. Unfortunately, the Trustee in bankruptcy required £80,000 in lieu of the Trustee's interest in the private residence. The client could not re-mortgage because of the bankruptcy therefore, R & E Finance arranged a second charge 10-year loan without demonstrating income, secured on the private residence to discharge the Trustee's interest.

Case Study 4



INSOLVENCY (continued)A retailer operating as a limited company was struggling with historical unsecured creditors of £100,000. The main cause of the company’s difficulties was excessive rent and rates because of the high profile location of the business premises. The core of the business was very profitable and therefore the directors decided to relocate to cheaper premises. However, whilst this action stabilised the company’s ongoing cash flow and overheads, it did not deal with the problem of the £100,000 in unsecured creditors. Therefore, we at R & E Finance introduced the client to an Insolvency Practitioner who in turn structured the liquidation of the company to write off the £100,000 in unsecured creditors. Subsequently a new limited company was created to carry on the retailing business and we at this office arranged £50,000 of Working Capital despite the historical credit problems.

Case Study 5A client lost a major Court case and was made bankrupt. The client could not prove income. Despite these issues, a second charge facility secured on the private residence was arranged to enable the bankruptcy to be annulled and restore the client's credit rating.

Case Study 6

A dentist was a discharged bankrupt and had good accounts. His Trustee in bankruptcy required £100,000 to release the Trustee's interest in the private residence. We were able to arrange a second charge loan to discharge the Trustee.

Case Study 7

A father and son had developed a house and created 7 flats. The short-term lender would not extend the facility and appointed Receivers. R & E Finance arranged a facility to discharge the Receivers.

Case Study 8



ASSET BASED LENDINGThere are a host of asset based funders now able to help businesses when the High street banks cannot. Facilities are mainly arranged on a secured basis.

Type Description

Factoring A single debtor, start ups

Invoice Discounting High debtor concentration

Plant/Machinery Finance/Refinance, despite adverse problems

Vehicle Finance Despite severe adverse

Fixtures/Fittings For the licence trade and hotels e.g. carpets, flooring, televisions, Epos units.

Insolvency Issues Financing a Phoenix company

Examples A client required to restructure his

existing asset finance facilities as leverage against the equity of the assets to buy more machinery.

A start up restaurant required finance for fixtures and fittings.

A client raised finance on lodges to purchase more lodges



BRIDGING FINANCEThere are a number of bridging funders currently available to help businesses when the high street banks are unable to. Such facilities are on a secured basis.

Feature Description

Security First charge, second charge or even third charge

Asset Private residence, semi-commercial, commercial properties; even lan

Purpose Any purpose! Discharging a bank debt, paying off a tax bill, paying off rent arrears, finishing off a property, Working Capital, funding a Phoenix etc, etc

Adverse Credit No problem

Proof of Income Rarely needed as 6 or 9 months interest is deducted

Term Up to 2 years



BRIDGING FINANCE (continued)

Client had bought a property at auction, exchanged contracts and paid over his 10% deposit. After several extensions to the contract, the client had 7 days to complete. His bank let him down with 3 working days to go before losing his deposit. We arranged a facility that completed within 2 days!!

Case Study 1 A developer needed to discharge some preliminary fees before starting the project of knocking down his house to build out 12 apartments. R & E Finance arranged a second charge bridge for £50,000 to provide the necessary funds.

Case Study 3

Client wanted to buy a commercial property and convert it into apartments. He had no available funds. This office arranged 100% funding by using the equity in his other properties as additional security.

Case Study 2A client was able to buy an investment property from a Receiver for £1.7 million even though the break-up value was £2.7 million. This office arranged a 12-month facility for the full £1.7 million.

Case Study 4



DEVELOPMENT FINANCEThere are many development funders now able to assist businesses when the high street banks cannot. These facilities are on a secured basis.

Residential Up to 70% of the gross development value Finishing off part completed sites Conversions of commercial to residential Converting storage above retail premises to flats New build of apartments!! Deed of Priority facilities Little experience is required, just a good builder is

needed Use of additional security for 100% funding Interest roll up facilities All fees such as monitoring, legal and arrangement

fees added on in most instances

Mezzanine Finance Additional funding of up to 20% of

project costs can be arranged so that the client inputs only 10% of costs!

Planning Gain Funding 100% funding is possible. Commercial If an exit strategy is in place, we can

find the right solution



DEVELOPMENT FINANCE (continued)A developer wished to buy a commercial property in a hotspot of London. The senior debt of 70% of costs was arranged and mezzanine finance for 20% of costs was also arranged. The client input only 10% of project costs but retained 100% of the profit.

Case Study 1

A client had built a retail warehouse and rented it out on a long-term lease to a blue chip tenant. The tenant requested the client build out another 10 units around the U.K to be tenanted on the same lease terms. The client did not have the financial capacity to do this however, we were able to introduce the client to a specialist finance house who 100% funded the build outs on a 50/50 joint venture basis.

Case Study 3

A client wished to buy an office block and apply for planning permission to convert into 180 apartments for student accommodation. Once planning permission was achieved the office block was sold on for a substantial profit. R & E Finance arranged 100% of the purchase and planning fees. The specialist lender retained 75% of the profit and the client was happy with his 25% for no input.

Case Study 2

A client was able to buy for £750,000 a new commercial property valued at £1 million. He found a tenant who would pay to fit out the property interior and also sign a 20-year lease. On this basis a specialist lender funded 100% of the £750,000 on a 50/50 partnership basis whereby the client's input was nil.

Case Study 4

A client converts his restaurant and car park into 24 apartments.

A client to build 4 houses on land adjacent to her commercial Investment property.

A client to buy land and build out 56 houses. A client to demolish his house and build out

apartments. An 86 year old builder to build out 20 starter homes

on land on which he had obtained planning permission.

A client to build out 16 holiday cottages on land upon which planning permission had been obtain

Case Studies (various)



LICENCED TRADE (incl. HOTELS AND RESTAURANTS)During recent years, this sector has had to cope with many major and negative issues including the smoking ban, competition from the supermarkets and the lack of disposable income for the general public. As a direct result of these problems the management teams within these businesses have needed the support of professionals with the relevant experience. In turn, R & E Finance has recognised this growing problem and has been able to put together a team of professionals covering the following issues for the hotel, restaurant and licenced trade sectors. We at R & E Finance are able to offer this sector a great deal of support. Such support includes:

Turnaround Management support Interest only mortgage facilities Second charge loans Unsecured loans Negotiations of better terms with

breweries Valuation assessments Creation of a lease Advice on selling the business Asset purchase and refinance Funding for change of use Fund an outlet to pay off an insolvency

action.



COMMERCIAL & SEMI-COMMERCIAL

Interest only facilities 90% of discounted purchase price Borrow up to the age of 80 No proof of income Adverse credit Second charges Short leases.

There are a host of commercial and semi-commercial lenders now able to help businesses when the high street banks cannot help. Such facilities are on a secured basis.



COMMERCIAL & SEMI-COMMERCIAL(continued)

A married couple divorced. The commercial property they owned jointly had to be sold as part of the settlement to release the wife from the bank mortgage. The husband could not re-mortgage as he had bad credit. The problem was, the husband operated his transport business from the commercial premises. We were able to arrange a 100% facility for the eldest son to buy the property from his parents at a purchase price equating to the outstanding mortgage.

Case Study 1A wealthy businessman wished to sell his recruitment company. Unfortunately within the company was a large residential property portfolio, which needed to be sold to allow the sale of the recruitment company to proceed. The client was willing to sell to his property manager but wished to retain an interest in the capital growth of the portfolio. He was also willing to input 25% of the purchase price to help the new owners. Our team structured a new company to purchase the portfolio whereby the vendor input 25% of the purchase price into shareholders funds for a 26% shareholding in the new company. We were also able to arrange the commercial mortgage of 75% of the purchase price.

Case Study 3

A property investor who rented out an Indian restaurant wanted to transfer ownership to her niece at a discounted purchase price equivalent to the outstanding mortgage. We arranged such a facility.

Case Study 2



COMMERCIAL & SEMI-COMMERCIAL(continued)

A hotel where the business is seasonal has a competitive business mortgage of circa £1 million at BBR+1.5%. Unfortunately the client also had an expensive overdraft and business development loan with the same bank costing £3,000 per month. R & E Finance arranged a second charge facility to discharge the overdraft and business development loan and saved the clients £1,500 per month.

Case Study 4

Two independent clients wished to buy public houses, unfortunately neither had any cash to put into the venture. However, both clients had equity in other properties, which the lender used to leverage up against to fund 100% of the purchase price.

Case Study 6

A small engineering company required £50,000 to create new tooling for their forthcoming production in 2016. As there was equity in the commercial property that the client owns, our office arranged a second charge loan to allow the client to progress.

Case Study 5



BUY TO LET MORTGAGES

No maximum age at entry Limited company ownership Let to buy Let to let Bridge to let Ex-pats

Following recent comments by the Chancellor, the buy to let landscape has changed with respect to stamp duty and income tax considerations. In turn, I attach a copy of an article published in a national newspaper shortly after the Chancellor's comments.

Examples An architect age 73 with cash savings wanted

to build his portfolio of buy to lets A builder unable to sell a new build decided to

rent it out and remortgage the property on a buy to let basis by way of a new company

An aged client wanted to rent out his large house and buy something smaller in which to live

An aged client needed to release capital on his current house which he wished to rent out and he himself rent a smaller property



BUY TO LET MORTGAGES (continued)



RESIDENTIAL MORTGAGEDespite MMR it is still possible to:

Borrow up to the age of 85 Re-mortgage up to 85%

despite adverse credit on unsecured borrowings

Examples A client who was discharged from bankruptcy only 3

years ago was able to borrow up to 80% at normal rates of interest.

A mature client who could prove income was able to borrow into retirement at 2.99% interest.

An ex-pat working for a U.K company but based overseas was able to buy a property in the U.K at normal rates of interest.

A professional footballer with high income but only a 3-year contract was able to have a normal mortgage at very competitive interest rates based upon his contract term.



EQUITY RELEASEThis facility is becoming increasingly popular and is used for a variety of purposes which have included:

Discharge a Personal Guarantee to a bank. Discharge an overdraft facility. Purchase an investment property. Pay for a grandchild to train as an airline pilot. Discharge unsecured credit.



VALUABLE ITEMS

Jewellery Art Wines etc

Example Client had a cash-flow crisis and

needed £70,000 quickly. This was arranged, using the security of artwork valued at £150,000

Use such assets to borrow short term for any purpose

R & E Finance - Case Studies

Documents

Transcript of R & E Finance - Case Studies