Oil additive manufacturer secures £9.3m in debt funding
Trade Finance Global and Bibby Financial Services structure a £9.3m facility for SBZ Corporation, a global manufacturer, supplier and distributor of additives, markers, special products and Bitumen
SBZ Corporation, a global manufacturer and distributor of additives and chemicals for the oil industry, has received a £9.35m funding line, facilitated by Trade Finance Global, through Bibby Financial Services (BFS), to assist in the growth of its trade.
Essex based SBZ Corporation have received a mixture of Invoice Finance (£7m), Trade Finance (£1.5m) and FX facilities (£150k) to grow UK operations, along with an additional £700k in its US sister company.
SBZ was established in 2003. The business is a supplier and distributor 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.
Laurence Holder, Chief Executive at SBZ Corporation, 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 this often comes with a price premium. 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.
Mr 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.
Mark Abrams, Partner at Trade Finance Global, said: “SBZ needed a flexible facility which could grow as it increased its operations in the US. Working with BFS and TFG, SBZ Corporation was able to get a structured facility in place quickly so that it could have additional buying power and realise its growth plans.
“Working with BFS in the UK and the US, the funding line has enabled SBZ to use its international structure to leverage and grow in markets which were more difficult to secure funding in.
“SBZ are an example of a company with ambitions to expand in global markets, and using innovative finance structures to help facilitate that growth.”
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