Case Study 3 – Asset refinancing

An established building contractor had purchased a number of items of plant for specific contracts over a period of time to reduce its hire charges.  Having built up a small fleet of construction equipment, they were able to see how quickly the equipment paid for itself in the hire charge savings they were making.  However, in order to continue to invest in further plant and machinery they feared they would have to divert cash away from the businesses core activity.

The solution was to refinance the plant which they already owned, generating the cash to allow them to acquire additional items of equipment flexibly.  Being cash buyers, they could negotiate aggressively on price and buy the items on the spot.  This allowed them to purchase as and when the need for plant arose or when the opportunity to acquire items for good value presented itself. When the pool of purchased assets grew to a meaningful size, we secured additional refinance facilities to replenish the cash allowing the customer to invest in further plant.

The customer is now building a larger fleet of general assets that it can employ across a number of its development contracts. They are able to continually reinvest the cash raised in assets which have a relatively quick repayment period based upon savings made in hire charges. They are less exposed to shortages of specific assets available to hire and have greater flexibility about how they manage their projects (as having equipment on site no longer incurs hire costs). The ability to refinance relatively small amounts with a short turnaround time now means there is no interruption to the businesses core cashflow.