Background

FRP was introduced to a private equity-owned recruitment company following a breach of financial covenant, despite the fact that the accounts receivable collateral of this £250 million revenue business was performing well.

With the company in a growth phase, FRP was engaged to replace the existing lender with a more appropriate facility.

Action

Our Debt Advisory team ran a competitive debt-raising process, approaching six lenders to provide alternative facilities. The request was based upon temporary and permanent revenues as well as unbilled revenue – a commonly held, if often unleveraged asset in recruitment companies. The request also included a requirement for a cashflow-based loan to fund future acquisitions.

Outcome

A refinancing facility was successfully agreed, and incremental finance was secured to fund a capital expenditure programme, enabling the company to enhance its online presence.

Having assessed and negotiated terms received from all six lenders, and then filtered down to the optimal debt structure, FRP arranged a larger, more committed £26.5 million facility, a lower fee and margin structure, and a covenant package much better suited to a recruitment business.