BFS structures £9.3m facility for SBZ Corporation
SBZ Corporation, a global manufacturer and distributor of additives and chemicals for the oil industry, has received a £9.35m funding line from Bibby Financial Services (BFS) to grow its operations.
The new funding provides a mixture of invoice finance (£7m), trade finance (£1.5m) and FX facilities (£150k). In addition to funding the UK business, BFS was also able to provide £700k of invoice finance funding to SBZ’s U.S. based sister company through its operations in the U.S.
SBZ, which is based in Wickford, Essex, was established in 2003 and is a family run business owned by Laurence Holder. The business is a supplier and distributer of fuel additives, lubricant additives, base oils, marker dyes and specialist products designed to meet the needs of international oil groups.
Following strong recent growth, SBZ has invested heavily in its business this year and will be opening a new purpose built blending plant at its current facilities in January 2018 which will help to grow the business further. To help feed this new capacity, the business sought to increase the level of Invoice Finance funding that it could receive. By working with the business and understanding the future growth projections, BFS was able to increase the facility to £7m, giving the business the extra capacity that it needed.
Holder said: “We’ve seen significant growth in recent years as a result of increasing demand for our products. With a new facility opening soon, we needed additional buying power in order to purchase the supplies we require to serve our customers. Bibby Financial Services was able to provide us with the funding we needed in a short space of time.
“BFS bought into our vision for the future of the company and worked closely alongside us to structure a deal that met our needs.”
A key component to increasing the growth of the business is access to raw materials that SBZ imports into the UK. In the past, the business has worked with European suppliers on shorter delivery times but often coming with a premium price. Increasingly, the business is looking to suppliers in China and the Far East which are more competitive in pricing but with orders often taking between 6-8 weeks for delivery and payment required prior to dispatch. With the help of its new trade finance facility, SBZ is able to pay its suppliers upfront, allowing for the longer delivery times, and remain in a positive cash flow position.
Holder continued: “As a result of the EU referendum and the fall in the pound, we have seen our costs go up as we import a large proportion of our raw materials. At the same time, we have tried our best to keep our prices the same for our customers.
“We have therefore increasingly looked to other suppliers which are able to keep us competitive by providing raw materials at a lower cost. To remain in a strong cash flow position we now use our Trade Finance facility to navigate the different payment terms from international suppliers and are able to pay upfront.”
The final component to the funding package is the FX facility which allows the business to buy in China while trading in U.S. dollars. Working with bigger orders from its suppliers, SBZ agrees forward contracts which lock in the exchange rate at an agreed price, removing the risk of volatility in currency markets.
Paul Fraser, director of specialist finance at Bibby Financial Services, added: “This is a great example of how we can work with businesses to structure deals that not only support their short-term goals but their long-term ambitions too. SBZ was initially only looking for additional buying power, but by discussing the business’s needs and developing a keen understanding of its ambitions, we were able to put together a suite of products to help it realise its growth.
“As well as the funding in the UK, we were able to work with our operation in the U.S. to provide an additional funding line in this market where they were previously struggling to secure due to it predominantly being a UK business. SBZ is a great example of how we can work across our international business to provide funding in multiple markets to help the whole operations of an international business.
“SBZ is a successful business with ambitious plans for the future and we’re excited to be working alongside it to support its growth.”