Invoice discounting case studies
MBO of Reading firm saves local jobs
A Tilehurst-based business has secured funding from Lloyds TSB Commercial Finance to enable management to acquire the firm from its failing US parent company and save local jobs.
Olympia Tools is an importer and distributor of premium quality hand tools to DIY chains, builder's merchants and independent retailers. It supplies over 500 different products to customers such as Homebase, Focus DIY, Screwfix and Jewsons.
The business' US-based parent company filed for bankruptcy in December 2005 after trading suffered as a result of US steel import duties driving up the cost of raw materials.
However the UK operation, which was established in 1996, has remained successful with turnover growing from £1.25 million in 2001 to £4 million in 2006.
To raise the funds required to buy the UK arm from creditors, management approached asset based lending specialists Lloyds TSB Commercial Finance.
The team at Commercial Finance put together a US$1 million package of facilities which lent against the UK company's stock and debtor book.
Following the deal, the business is implementing a strategy which aims to grow sales by 20 per cent year on year. Sales to Europe have risen to 10 per cent and the management plans to continue targeting the lucrative market on the continent.
John Bramwell, managing director of Olympia Tools, said: This deal is vital to the future of the business and its employees. The UK division of Olympia Tools has been going from strength to strength and it was important for us to take full control in light of our parent company's bankruptcy.
The niche market for quality hand tools continues to grow in the UK and Europe and we are in a good position to capitalise on the strength of our brands and the quality of our products.
The facilities developed by Lloyds TSB Commercial Finance were essential for us to complete the transaction. We could not fund the deal using cash or our overdraft so we leveraged the value of our assets to ensure we could do the deal quickly. Steve Buckmaster, director - business development at Lloyds TSB Commercial Finance, said: "Lloyds TSB is delighted to have been given the opportunity to assist this strong management team in the acquisition of Olympia Tools.
By leveraging against Olympia's significant asset base, management now have a solid and flexible financial foundation that leaves them well placed to achieve their growth goals.
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