Management buy-out
| purpose | Management buy-out |
| loan limit | $11,500,000 |
| lvr | 85% eligible debtors 40% eligible inventory 85% eligible equipment |
| loan term | 2 years with 1 year option |
| facility type | Asset based revolving credit facility and term loan facility |
| interest rate | Variable |
An overseas listed company was divesting an Australian subsidiary which supplied hardware to the mining and engineering sector. Currently servicing all states, the business had annual turnover of $40million +. The acquisition price of the MBO via the current Managing Director was $12.8million, with $2million Vendor Finance facility.
The Prime Lender had offered $9million debt facility and $3million placement lender private equity. The disadvantages were that the lender required a 30% shareholding for the term of the private equity placement, and a number of issues existed with pricing the shares at the end of term.
Balmain Guarantee arranged a $11.5million debt facility, which requires only $800k equity from the current Managing Director and zero dilution of shareholding.
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