A transaction that stalled and started over several times finally got settled after 13 months
Finagri director Justin Barnes once worked with a family who owned a large-scale dryland farming operation. They were looking to expand by purchasing the 50% share their partner owned in another similar business.
The family was keen to expand their business despite looking at hauling over $25m in debt. For months, Barnes worked tirelessly to find ways to help them get the 5,000 acres of land from their partner.
Barnes and his wife provide financial services and guidance to businesses in rural communities that are involved in farming and agriculture.
Getting the approval across the line got harder by mid-2017. Although all the banks saw the merit of the purchase, they found it hard to approve because of its higher debt load and lower equity position. Barnes was committed to helping his clients.
"My clients are very good farmers who are always looking to drive their profit. They have a great future in the industry," Barnes told MPA. "Because they are so driven, I was sure they would get an approval from one of the agri-lenders."
They were up against another challenge: the cropping season at that time was not going according to plan.
But they still secured the approval.
Along with the term lending and overdraft, the Bank of Queensland offered $1.2m trade finance facility to assist with the purchase of crop inputs, such as chemicals and fertilizer. These inputs were traditionally funded by the chemical supplier.
"We also achieved a savings of close to 1.00% of the term lending, saving the business around $250,000 in interest a year,” Barnes said.
The transaction settled in late February 2018, 13 months after the negotiation process commenced.
Barnes says it was the hardest loan approval he had to source. It was not just a simple refinance application; it was also a property purchase from an existing partnership. The transaction involved a lot of moving parts.
But he trusted his client's ability to make the deal work. "If you believe in the deal and in your client, keep working hard to get an approval," Barnes said. "Don't give up."
In MPA’s happiest client short story series we showcase stand out ‘client success stories’ from brokers and discover what they learnt along the way. Leaving aside the details of the deal, we explore the human side of the story and how brokers really make an impact in people’s lives. If you have a client story you would like to share please email the editor: [email protected].
