Major Australian logistics and supply chain operation Kings Transport Group has announced it has used a global advisory and investment firm to refinance its incumbent bank valued at around $AUD8 million, enabling the transport operation to execute a transformation plan.
Gordon Brothers, was the global investment company engaged by Kings ,a transport group that was established in 1991, offering integrated supply chain solutions across Australia and New Zealand and which employs more than 800 staff and 1300 subcontract drivers.
Gordon Brothers says it provided an Asset-Based Lending (ABL) structure which focused on the company’s assets rather than earnings, ensuring Kings could implement its transformation plan without the constraints of heavy financial covenants. The underlying collateral included more than 245 trucks, trailers and other transport assets, with a what the company describes as a ‘sculpted amortisation profile to support operational cashflows’.
The company says the deal comes at a time where many businesses have been affected by the fallout from COVID-19 and are seeking alternatives to traditional lending.
Managing director of Gordon Brother, Matt Aubrey said that COVID-19’s adverse impacts on businesses around Australia is unprecedented. But fortunately, this is where our business can help.
“We have the liquidity and we are able to support and advise companies with asset-rich balance sheets not just now during this pandemic, but as we have done for the last 100 years,” Matt Aubrey said
“We are proud to have played a significant role in helping Kings Transport Group execute its transformation plan through our Asset-based Lending structure. Kings are now able to execute their plan with the support of a facility focused on the assets rather than earnings,” he added.
The company claims asset based lending is becoming more popular, even among investment grade borrowers because of its flexible structures that require no financial covenants.
“COVID-19, while disruptive, has also allowed companies to take the time to think about their capital structure and business plan moving forward, and convert their revolving credit facilities to Asset Based Lending facilities. For a number of asset and inventory rich businesses we are pleased to have played an instrumental part in providing these companies time and the runway to execute their transformation and turnaround plan” said Aubrey.
In May 2020, Gordon Brothers also closed a first of its kind deal to disperse more than 100 heavy haulage assets from one of Australia’s largest national freight companies in partnership with leading asset management and disposition company, Ritchie Bros.
“COVID-19 has presented us with many different opportunities. Recently we were involved in a time sensitive situation which required significant liquidity to be provided to a well-known tier one heavy haulage transport company to help them scale back their business by outright buying the entire assets in a non-core division,” said Aubrey.
“Prominent brands in heavy haulage, Kenworth Trucks and Drake trailers made up the majority of assets in the fleet, including 156 prime movers and 308 trailers and dollies. The transaction window required by the seller was tight, and the deal needed to close by the end of the company’s Fiscal Year. The ability to appraise the fleet, understand the risks, and importantly complete the multi million dollar deal in a timely fashion was critical to achieving this successful outcome,” he added.