Case Study
Restructuring and Refinancing a Jeweler’s Loans
Overview
Long established Perth-based jewelry business required debt restructuring and consolidation.
The challenge
Due to significant costs associated with the set up and subsequent closure of an east coast presence and the closure and restructuring of associated businesses, the borrower took on short-term, cash-draining loans, which stretched key supplier payments and ATO debts. The loans did not fit the business’ trading cycle, which led to further ill-fitting loans and higher costs. The result was a collection of costly loans the management of which drew the borrower’s attention away from the business’ core activity.
A solution was needed that simplified the company’s debt capital, enabled key suppliers to be paid, funded the purchase of additional stock for the Christmas trading period and ensured compliance with an ATO payment plan.
Issues to consider included ensuring we had effective physical and legal security measures in place given the business’ main assets: jewelry and diamonds.
The solution
Replaced previous short-term loans with a $3m loan facility that aligned with the business’ seasonal requirements.
Security issue was solved by requiring a minimum value of jewelry and diamonds be held in a safe controlled solely by Avior and not accessible to the borrower without consent of Avior. Further security obtained in the form of a second mortgage on the owner’s residential property, which has significant equity.
Results
Borrower was able to pay out all short-term debts, cleared payments to major suppliers and facilitated ATO payment plan compliance. Plus, the owner could now focus.