legion trade finance

Trade finance solutionsto help pay suppliers

Introduction to Legion Trade Finance

Trade finance solutionsto help pay suppliersProprietary & confidential content

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Contents

1. Trade Finance

2. Legion

3. What’s In It For Me?

4. Spotting Trade Finance Deals

5. Contacts


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1. Trade Finance - What Is It?

● Involves financing the movement of goods in transit

● It allows trading businesses to purchase goods from their suppliers for the eventual onward sale to their customers

● It is typically short term funding over the trade cycle of the goods

● Trade finance can take many forms including:

Letters of credit Direct supplier payments Import loans Stock loans

Legion’s focus is on the SME trade finance market

Can range from:• multi-billion pound lines for large

commodity traders; to….• a few thousand pounds to tiny

companies for one off shipments…..

• and everything in between


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1. Trade Finance - When Is It Appropriate?

● Tradeco: trading business with a PO for goods but unable to pay suppliers eg no funding, lack of trading history, adverse history,

seasonal fluctuations…

● The Goods: raw materials of finished goods, decent gross margin (30%+), little processing, easily disposable, low obsolescence risk pass

the “flog on eBay test”

● End Customer: purchase order to Tradeco for goods or track record of buying; decent credit rating

● Supplier: won’t grant Tradeco credit so won’t release goods until paid/ receive guarantee

TRADECOSUPPLIER


1. Trade Finance - An Example

1. Customers order from Tradeco

2. Tradeco secures goods from supplier

3. Tradeco secures trade finance

4. Trade finance funder pays supplier

5. Goods supplied to Tradeco

6. Tradeco sells the goods to end customer

7. Customer pays Tradeco for goods

8. Tradeco settles the trade finance

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SUPPLIER TRADECO

TRADE FINANCE


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2. Legion - Overview

● Founded just over 4 years ago by the directors and private investors

● Provide diverse trade finance and special situations working capital solutions to UK SMEs

● Typical funding lines £100k - £3 million (larger facilities possible with partners)

● 23 staff with offices in Henley-on-Thames, Birmingham, Manchester and London

Direct supplier payments

Supply chain finance Stock facilities & term loans

Letters of creditStructured finance &

special situations


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2. Legion - Our Solutions

SUPPLIER PAYMENTS SUPPLY CHAIN FINANCE

DESCRIPTION Payments direct to suppliers for fresh stock, paying 100% of purchase price plus duty and logistics

Supply chain payments in either direction ie direct supplier payments or reverse factoring. Made via our JVCo: Legion Tower Trade (“LTT”)

SIZE £100k to £3m £1m+

RATE 3%+ per 30 days 1%+ per 30 days

TERM 30 days to 6 months+ (revolving/ recycling during term)

Max 120 days

TARGET CLIENTS SMEs of all stages/ types Mid & large corporates with credit insurance rating to cover facility size

SECURITY Goods, debentures, PGs, charges Credit insurance


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2. Legion - Our Solutions (cont)

TERM LOAN & STOCK FACILITY LETTER OF CREDIT (“LC”)

DESCRIPTION • Term loan direct to client to help finance supplier payments and working capital; or

• Funding direct to client against existing stock (up to 100% cost)

Payment guarantee to suppliers subject to satisfying delivery and other conditions: LC provided by UK bank with cash collateral from Legion as security

SIZE £100k to £3m £100k to £3m

RATE 3%+ per 30 days 3%+ per 30 days

TERM Max 12 months (ideally shorter) with scheduled payments for interest and capital

30 days to 6 months+

TARGET CLIENTS SMEs of all stages/ types SMEs of all stages/ types

SECURITY Debentures, PGs, charges over specific assets (stock etc)

Debentures, PGs, charges over specific assets


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2. Legion - Our Solutions (cont)

SPECIAL SITUATIONS & STRUCTURED FINANCE

OTHER ASSET BASED LENDING

DESCRIPTION Structured working capital/ project finance, typically using trade finance methodology but including equity involvement where viable

• Property: development finance & bridging• Export debtors finance• Block discounting

SIZE £1m-£3m £250k-£3m

RATE 3%+ per 30 days plus equity kickers 3%+ per 30 days

TERM 6 months+ 6 months +

TARGET CLIENTS SMEs: struggling/ distressed; doing a transaction

SMEs, property developers

SECURITY Goods, debentures, PGs, charges

• Property: charges, debentures, PGs• Export debtors & block discounting: invoices,

credit insurance, debentures, PGs


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2. Legion - Why Clients Use Us?

● Diverse product range covering all types of trade and stock finance

● Tailored, structured solutions, bespoke to our clients’ trading needs

● Not averse to difficult/ special situations – indeed they are our speciality

● Provide 100% upfront funding, including duty and logistics

● Flexibility on terms from a single trade over a few weeks to longer term, revolving facilities covering multiple cycles

● Focus on SMEs of all types: start ups through to well established groups

● Quick decision making and reliable service with short reporting lines

● An experienced team

● Proven track record: funded trades with onward sale value of over £100m in last 3 years

● We deliver!


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CASE STUDY – ENGINEERING GROUP

● Large international engineering group

● Maxed out on current facilities

● New contracted orders needed funding

● £2 million stock purchasing facility from Legion

● Enabled contracts to be delivered (almost on time!)

● Significant incremental profits to bottom line

3. What’s In It For Me? - Tradeco

WHAT’S IN IT FOR TRADECOS?

● Provides up front funding at the start of the trade cycle

● Delivers 100% funding for goods

● Can also cover logistics & duty costs

● Flexible terms and structure bespoke to requirements

● Complimentary to existing funding lines from other lenders

● Can be off-balance sheet

● Enables trades that would otherwise not have been possible

● Improves a Tradeco’s bottom line


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3. What’s In It For Me? - Advisers

WHAT’S IN IT FOR ADVISERS?

● Helps get deals away, especially for IPs and corporate financiers

● 100% funding against stock vs traditional discounted advance

● Bridges gaps in funding and/ or valuations

● Introduces extra headroom, especially in early days post deal eg post administration

● Helps advisers earn fees!

CASE STUDY – HOMEWARES

● Homewares supplier to major retailers

● MBO out of admin

● Needed acquisition funding & working capital

● Legion funded 100% of stock as consideration plus purchasing facility for immediate working capital

● Allowed the MBO to complete and generated early working capital headroom


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3. What’s In It For Me? - Other Funders

WHAT’S IN IT FOR OTHER FUNDERS?

● Complementary to existing bank lines – top up funding or off balance sheet

● Doesn’t interfere with security arrangements

● Non-bank funding, so incumbents retain customer

● Improves financial performance and hence underlying security

CASE STUDY – FOOD INGREDIENTS

● Gluten free food ingredients supplier

● Rapidly growing; incumbent CID funder couldn’t extend support to front end payments

● Client needed funding to fulfil new orders

● Legion provided a revolving trade finance facility with direct supplier payments

● Legion paid out by CID once customers were invoiced

● “Win Win” for Legion & CID funder


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4. Spotting Trade Finance Deals

The Client:

● Any size and sector – must be UK Ltd or LLP (no sole traders or overseas)

● Struggling to raise funding from elsewhere eg highly geared, poor history, no track record

● Good management team

● Solvent with sufficient security available

If Trade Finance:

● Suppliers will not release goods without payment

● Goods have a gross margin of 30%+

● Finished goods or raw materials, with low obsolescence risk

● A confirmed order for the goods (or atleast a track record of sales)

If Special Situation/ Other Asset Based Lending:

● Short term requirement max. 12 months with clear exit route for Legion (eg property sale or turnaround refinance)

● High margin activity (and security, UK client etc)

● We are simple, all we ask for is client introductions:– Just a name and number and

we can do the rest– Opposite is a guideline of

what we look for, to assist you in spotting leads for us

– But if in doubt, please just ask one of our team, happy to explore anything!

● We will also pay referral fees for introductions that materialise into clients, and will implement a standing agreement between us

What Legion Look For


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5. Contacts

Business Contact:

Mainline: 0845 548 7234

Email: [email protected]

Business Development Team:

Paul Levy (BD Director - Commercial): [email protected]

Chris Divers (BD Director - Corporate): [email protected]

Graham Meek (Midlands): [email protected]

Bob Walker (North & Mids): [email protected]

Chris Williams (North): [email protected]

John Landers (South West): [email protected]

Marc Bick (South East): [email protected]

Alan Smith (East): [email protected]

Brian Colvill (South Coast): [email protected]

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