This rail operator needed to expand their rail fleet and came to us for funding assistance. The expansion included the purchase of five Locomotives, costing over £1 million to facilitate a new contract the customer had acquired with a national rail provider.
The Challenge
There were challenges within the deal and almost all of the mainstream funders did not appreciate the strength of the assets that the customer was looking to fund, meaning the previous finance houses had pushed the customer towards unsecured loan funding. This type of funding is traditionally more expensive and short term, which would have resulted in the profit margins of the new contract being dramatically reduced.
The Solution
We were able to fund £1.2 million of assets, which were secured on a hire purchase with a VAT deferral. This meant that good cashflow was maintained at the outset of a capital expenditure heavy period of the new contract. This deal was also over five years, allowing the payment to be spread into more affordable payments.
The previous finance houses used were unable to secure asset finance, however Moorgate Finance found a lender that would use a human underwriter to understand the value of the assets as security for a lend. An external valuation confirmed that the customer was purchasing the Locomotives at a heavily reduced price versus the verified value of the Locomotives. This valuation meant that we were able to work with the lender to structure a facility to allow the customer to purchase five Locomotives for their hire fleet without requiring any capital outlay at the onset.
The assets were immediately refurbished and liveried before being hired out under the framework onto our national rail network. The additional units purchased allowed the customer to increase their turnover by c.40% and deliver on their contractual obligations.
The Highlights
✅ £1.2 million funded for a rail operations company
✅ Other finance houses failed to appreciate the value of the assets and pushed the customer towards unsecured loan funding
✅ The deal meant that good cashflow was maintained at the outset of a capital expenditure heavy period of the new contract
✅The additional units purchased allowed the customer to increase their turnover by c.4-% and deliver on their contractual obligations
Give us a call on 01908 92 62 62 or head to www.moorgatefinance.com/apply-now to start the conversation.