Understanding highly leveraged businesses

Written by Sample HubSpot User | Feb 12, 2019 11:27:00 AM

The client has a restaurant chain with turnover of £300m per year.

A large casual dining restaurant chain with over 300 sites, who recently exited a CVA process and were refinanced by Blackstone and KKR. The focus of their business, following the sale of a major brand and closure of underperforming sites, was on refurbishing existing sites and opening new ones. This resulted in an obvious strain on working capital.

TradeBridge worked hard with them to understand the highly leveraged business to find a solution to this challenge. We then allocated funds of £3m, unsecured so as to not breach any debt covenants.

The client now focuses these funds on cost-cutting measures on the purchase ledger, renegotiating supply contracts and delivering additional margin from suppliers. Alongside the savings they have made, the client has exercised the option of extended credit, repaying us on 120 days, therefore generating a further 60 days of operating cash flow.

This has enabled the client to increase the speed of refurbishing existing sites and opening new ones. As a result, they have improved their run rate and EBITDA figures.

You can find out more about this finance solution and how it could help your business on our turnaround and margin improvement page.

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