The Situation

A unique quarry finance facility for an industrious entrepreneur looking to make the most of his opportunities.

As a lender, our mission is to help entrepreneurs realise opportunities that they can create significant value from.

In this situation, our client had come across an opportunity to buy a quarry and 100% share capital in a business that held an additional two quarries, all adjacent to one another. One of the quarries spanned over an impressive 28-acres of land but was filled with water 26 meters deep.

As a result of the complications around draining the water, contamination and the price tag the vendor had set, the quarries had aroused no interest from other entrepreneurs. However, this did not deter our client. As they had unique experience dealing with water drainage scenarios, seeing value in the site where other investors saw concerns.

Around the time of enquiring, a contact of our client’s was looking for solutions to dispose of the waste generated from the construction work. Residential housing developers had also expressed interest in a potential development around the area. By understanding this, our client had agreed on a deal with his contact to infill the quarry with the excess waste from their construction project once the water had been drained. This was made more appealing to the company as the adjacent quarry was positioned next to a railway line, making the waste easier to transport and led to the parties agreeing on a deal. In addition, after the infilling, the housing developer had agreed to acquire the 28-acre site once planning was agreed, creating a massive opportunity for the entrepreneur to create significant value from the quarries if he could get the quarry finance needed to make the acquisitions.

Where We Came In

Faced with a truly unique opportunity, our client needed a total of c£4m to make the purchases happen. They had an offer from a mainstream funder to lend c£3m by taking a 1st charge over the assets combined with a £650k contribution from their own funds and a private investor. This left an additional £500k funding gap that the entrepreneur needed to fill to complete the purchase.

In search of a funder to support this entrepreneur, the client’s finance broker found that many funders were not willing to support this entrepreneur due to the time-consuming investigations they would have to make surrounding the licences to drain water, the overage agreements requested by the vendor and the risk of a failed planning application.

When contacted by the broker, we immediately recognised the scale of the opportunity for this client and organised to meet in person. It was arranged shortly after that we would support the entrepreneur with the £500k quarry finance that they needed via taking 2nd charge security over the quarries behind the mainstream funder and 2nd charges over other assets the entrepreneur held.

Term: 12 Months

Timing: 1 Month

Security: 2nd charge over quarries | 2nd legal charge over a residential property | 2nd legal charge over an industrial unit | Chattles mortgage over plant and machinery | Debentures | Corporate guarantees | Personal guarantee

The Result

We lent our client the £500k they needed, and they successfully purchased the quarry and the share capital. Due to the council having various problems around people trespassing on the quarry to take a dip in the summer and the obvious concerns this raised, the council and the local community heavily supported our client’s proposals to drain the water, infill the land and turn it into beautiful homes that will be loved by many.