Real estate collateral secured bridge financing for a construction materials manufacturer (I)

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Summary
Established in 1991, the Company manufactures a wide range of construction materials - fasteners, joints, hinges, and other metal and plastic products used in construction. In August of 2020, the owners of the Company retired and sold the business. The Company was acquired by new management from the industry with a view to expand the business and activate sales. However, only the business itself was bought and the real estate where the Company operates was split from the assets. The premises continued to be rented out from the previous owners. At this moment, the Company is seeking EUR 643,750 financing for 12 months to purchase the real estate where the Company is operating and become fully independent from the previous shareholders. The loan will carry an 11.00% annual interest rate (0.92% monthly) with principal repayment at the end of the term through refinancing in a bank.
The loan will be secured with a mortgage pledge on the industrial real estate which the Company will purchase with the financing. The collateral is valued by Latio at EUR 894,000 (which implies loan to value ratio or LTV at 72%). Additionally, the financing will be secured with a personal guarantee of the owner, and with a guarantee from a related company with a significant equity capital of EUR 2.4 million. The guarantor company is an existing client of Capitalia with an excellent payment discipline.

There are a number of factors that make lending to the Company an attractive opportunity and the main highlights are as follows:
  • The Company has almost 30 years of experience in the construction materials manufacturing industry.
  • The loan is secured with a mortgage to the industrial real estate property worth EUR 894,000 (LTV of 72%).
  • The financing is also secured with one personal guarantee and with a guarantee of a related company.
  • The management has previous experience in successfully acquiring companies and improving their financials.
  • The Company has a well-diversified client portfolio and consists of known and reputable companies.
  • The guarantor company is an existing client of Capitalia with an excellent payment discipline and significant equity capital of EUR 2.4 million.
ID 14940-1-LV
Industry Manufacturing
Location Latvia
Loan type Business loan
Term 12 months
Expected return 11%
Interest rate Monthly
Amortisation At the end of the term
Risk grade A (91 out of 100)
Personal warranty From the owner and related company
Collateral Mortgage on the industrial real estate property in Riga worth EUR 894,000
Capitalia's cofinancing 120750
Target amount 643750
Application term 31.01.2021
EUR 621,750.00 financed