Funding eases cashflow restrictions for catering and refrigeration equipment supplier
Based in Essex and Lancashire, the catering and commercial refrigeration equipment supplier is set to capitalise on an improving market, after securing a £2.5 million funding package from Lloyds TSB.
Valera, a market-leading supplier of equipment to the catering and retail sector, was established in 1993 and is the sole UK distributor of a number of world-class brands.
From its bases in West Thurrock, Essex and Tarleton, near Preston, the firm distributes a vast range of commercial refrigeration for storage and display purposes (including modular counter runs giving a bespoke solution), commercial microwave ovens, fat free fryers, mixers, glass/dishwashers and laundry equipment nationwide and employs 40 people.
The firm imports equipment from USA, Europe and Asia and when the recession hit, Valera found its cashflow affected by a drop in the euro’s exchange rate with stock that had been purchased in advance left unsold.
To boost liquidity and ensure the business was in a strong position to grow when market conditions improved, Valera approached Lloyds TSB, which put together a funding package to ease cashflow restrictions and provide day-to-day support.
Lloyds TSB Commercial Finance, the asset based finance arm of the bank, supplied a £1.6 million cash flow facility. Based on the firm’s issued invoices, the funding grows in-line with sales to increase liquidity when a company needs it most.
Lloyds TSB Commercial, the bank’s SME lending division, provided Valera with a £400,000 loan plus International Trade facilities, carefully structured to meet the company’s requirements.
With Lloyds TSB’s support, the business is now in a strong position to capitalise on the improving economic conditions, with plans in place to bring new products to market and extend its already widespread customer base.
Pratap Gadhvi, Managing Director and founder of Valera, said: “In 2008, we suffered as a result of the international economic crisis, seeing a warehouse full of unsold stock and a strained cashflow due to extended payment times caused by overseas trading conditions. Since that time, the residual issues have hampered the growth of the business, particularly in the past nine months.
“Our banking partner was largely unsupportive of our situation, so our advisers Steve Talbot and Mark Standish of Mazars LLP approached Lloyds TSB, knowing they have the appetite to support businesses with the range of funding solutions that we required.
“The team worked closely with us to put in place a finance package to bridge the gap between buying stock from abroad and meeting other payment commitments, before payment is received from our customers. Over 60 per cent of our business is done between April and September, so it was also important to ensure cashflow was boosted all year round.
“Since agreeing the funding, we have put in place an expansion strategy and hope to take turnover to £10 million by 2013, with plans to diversify our product base and increase customer numbers.”
Mark Harrison, Associate Director Business Development at Lloyds TSB Commercial Finance, said: “Valera is a great example of a forward-thinking business which is set for notable growth in the coming years, despite being adversely affected by the recession.
“The invoice finance facility we put in place for Valera advances up to 90 per cent of issued invoices, ensuring the firm maintains healthy and flexible liquidity which can cover the company during the quieter winter months, while also growing in-line with the busy summer period.”
Gary Byrne, Relationship Director, Lloyds TSB Commercial, said: “We worked closely with Pratap and the management team to ensure the loan funds were available as quickly as possible to enable the firm to fund its expansion plans.
“Valera is a shining example of a company which is now fully capitalising on the increased opportunities in its market and growing as a result.”
Steve Talbot, Senior Corporate Finance Manager, Mazars LLP, said: “Valera is an existing client of the firm and we were requested to assist in the refinancing of the business with a supportive funding partner.
“Our experience in advising owner managed businesses, and relationships with key funders, enabled us to put together a strong funding proposal. Lloyds TSB’s positive, pragmatic approach and desire to build a long term relationship made them the favoured partner for Valera.
“Mazars worked closely with the Lloyds TSB team and Valera’s management to deliver a funding solution that will enable the company to enhance its market leading position.”
August 2011