Agriculture Wholesale Company Seeking Loan in Spain

- Company involved in the processing and export of Cocoa to Northern Africa.

- Seeking senior secured lender for a USD 1.5 million short-term commodity trade finance facility for a cocoa processor/trader in Spain.

- Each deal amount is approx USD 50,000 - USD 100,000 on shipment of cocoa powder from Spain to 4–5 buyers mainly in Northern Africa (Morocco, Algeria, and Tunisia).

- Each deal of 40-80 days is on an uncommitted, transactional basis and continuously recurs.

- 60% of the deals are receivable finance of 30–60 days. Buyer non-payment risk is covered with Coface Spain credit insurance.

- 10% of the deals are voyage finance of 10–20 days. Financing is from the load port to the destination port. The lender receives payment 2 days before the vessel.

Arrives at the destination port. Release of title to cocoa occurs after receipt of payment.

- 30% of the deals are voyage finance followed by receivable finance for a financing period of 40–80 days.

- Up to 15 deals may overlap but cannot exceed USD 1.5 million in aggregate.

- Senior secured lender to provide 85% of each loan. Hommocks will provide 15% of each loan as a junior secured lender.

- Hommocks will document the agreements and book/administer the loans.

- Interest rate is SOFR + 8%pa. Current SOFR is approx 5.35%pa. Thus, all-in rate is 13.35 %pa (=8.5% + 5.35%) currently. There will be a floor SOFR of 3.5%pa.

- The borrower company was founded 11 years ago and is located in Northern Spain.

- The borrower company's annual sales are USD 2.5 million, total assets USD 4 million, and equity is USD 0.8 million.

The company supplies cocoa powder to wholesalers and distributors in Algeria, Tunisia, Egypt, and Morocco.

Business is to:

A) Import cocoa liquor and cake from West Africa.

B) Process and produce 3,000 to 5,000 metric tons of Cocoa powder annually and,

C) Export final cocoa products to 5 main customers mainly in Northern Africa.

Tangible assets include machinery. The products on the vessel will be pledged in favour of the lender.

The company's office is located in Northern Spain.

Business is mostly funded from internally generated cash. Small inventory finance from a trade finance fund. Privately owned by the founder.