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Fresh Thinking Capital

Success
Stories.

The Situation.

Our client was a nationwide dental group. Founded to make quality dental care accessible and affordable to all in response to the shortage of NHS dentists. With an ethos of investing heavily in their dental professionals, the business provided them with the latest technology and training. In order to support the communities they served. In addition to expanding their offering from check-ups to facial line fillers, dental implants and wrinkle reductions.

The company’s success had seen them acquire over 20 dental practices throughout their 15 years of trading. To capitalise on this, the business decided to venture out and acquire various dental laboratories. All providing cosmetic, restorative and implant products to hospitals and dentists throughout the UK.

The acquired dental practices helped diversify the business’ offering. However, they required a sizeable amount of cash flow to fund operations. Whilst the laboratories were being established, the bank provided £1m in working capital funding. To support the dental laboratory acquisitions through their integration phase.

The laboratories unfortunately did not perform as anticipated. In addition, patient demand at some dental practices fluctuated. This negatively impacted cash flow. The bank had a long established relationship with the client; however, after lending the initial funding, they were unable to provide the extra healthcare finance needed to support operations.

The business therefore needed a healthcare finance solution to fill the working capital gap. The business decided that to streamline operations, save cash flow and truly maximise shareholder value, the best option would be to sell the business’ non-performing assets that were consuming cash. This would allow the business to repay the bank, reduce their cash outflows and maximise profit.

Car House

Where we came in

As the bank could not lend the additional funds needed to maintain operations, they needed a funding partner who could inject short-term working capital funding into the business whilst they were in the process of selling their non-performing assets.

The business was offered equity finance from another lender for part of the company, but the owner did not want to give up shares and decided a debt finance solution would be better.

We were contacted by the bank’s adviser to see if we could support the business whilst they went through this transition. Working with the bank and understanding the business’ cash flow and restructuring plan, we agreed to take a second charge and second debenture behind the banks existing security to provide the business with an additional £900k of working capital funding. This was to be paid out in multiple tranches as and when the business needed it.

As with many sales, delays occurred, and we were asked to support the business for longer than expected. We extended the term to 28 months to give sufficient time to sell the assets and get their working capital in order whilst lending an additional £900k to support the extended operational expenses.

Amount:
1,800,000
Term:
28 Months
Timing:
Two weeks to complete
Security:
2nd charges over dental practices | 2x 2nd charges of BTLs | 2nd Debentures | Corporate guarantees | Personal guarantee
Globe

The Result

Working with the bank, their advisors and the company the business successfully maintained their wider operations and off-loaded their non-performing assets, subsequently repaying the bank in full. The business’ cash flow is now on a stable footing and profits have severely increased as a result, ultimately allowing the business to streamline its operations without sacrificing any hard-earned equity.

Fresh Thinking Capital