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Working capital financing for a market-leading media and advertising company (III)

Summary

The Company, founded in 2015, places and manages LED advertising screens in Riga. The Company rents advertisement spaces from Riga municipality, installs LED screens, and sells advertisement placements to advertising agencies. The screens are installed on walls of houses or in stand-alone locations. 

The Company is set to continue expanding the DCL network in Riga and build additional two-sided screens. The development project, coupled with a slower season for advertising, has put a strain on the Company’s working capital, therefore, the Company is seeking EUR 256,500 financing for 12 months to cover supplier invoices. The loan will carry a 14.04% annual interest rate (1.17% monthly) and it will be amortized monthly. 

The loan will be secured with the 2nd-rank commercial pledge on 13 large-format screens with a free-of-debt book value of EUR 687,819 (Capitalia also holds the senior pledge on the pledged screens for a loan ending in December 2024). The sole shareholder will provide the guarantee for the loan too. The Company is a repeat client of Capitalia and has already repaid more than EUR 400,000 in loan principals. The project risk rate is C (78 out of 100).

The minimum financing target in order to close the transaction is set at EUR 102,600 and another financing tranche might be published within the approved limit of EUR 256,500.

Key investment highlights

There are a number of factors that make lending to the Company an attractive opportunity and the main highlights are as follows:

    • The owner has more than 20 years of experience in the marketing business.
    • The Company is a sure market leader in the number of advertisement stands in Riga.
    • The loan is secured with  the 2nd-rank commercial pledge on 13 large-format screens with a free-of-debt book value of EUR 687,819.
    • In addition to the pledge, a personal guarantee from the shareholder is provided.
    • The Company has been servicing the active loan according to the repayment schedule with no delays.
    • In 2022, the Company received a mezzanine expansion financing of EUR 2M from a well-known local Investment fund.
ID 16017003-LV
Industry Advertising
Location Latvia
Loan type Business Loan
Term 12 months
Expected return 14.04%
Interest rate Monthly
Amortisation Monthly, starting from the 3rd month
Risk grade C (78 out of 100)
Personal warranty From the owner
Collateral A second-rank pledge
on specific fixed
assets
Target amount 182300
Repaid
This loan is already funded.
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Capitalia is the leading financer for small and medium enterprises in the Baltic sea region. Operating since 2007 we have financed more than 5000 businesses investing over EUR 100 million in their development.

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