Facilitating Collateral Transfer Facility for Housing Project Bid

Background: A Dutch construction company, with modest experience in the industry, faced the challenge of qualifying for a tender bid for a Housing project. In need of additional financial support to meet the requirements and secure the bid, the company sought the expertise of Redeure, a European Provider Group specializing in financial solutions.

Financial Arrangements:

• Total Facility Requirement: €30 million
• Facility Obtained: Collateral Transfer Facility of €30 million
• Annual Contract Fee: 5.15%
• Term: 12 months (renewable to 2 years if required)
• Deposit against Contract Fee: €375,000

Operational Execution: Redeure, acting as the intermediary, successfully secured a Collateral Transfer Facility of €30 million for the Dutch construction company. This facility served as a strategic financial enhancement, providing the client with the ability to qualify for the tender bid and act as a fall-back option in case additional funding was required during the project.

The collateral, in the form of a Demand Guarantee (issued under standard terms), was held by the client. This collateral not only bolstered their financial standing for the bid but also acted as a temporary capital injection on standby. Subsequently, with the collateral in their possession, the client applied to their domestic bank for a structured loan advance, leveraging a forward exit strategy for the housing development.

Exit Strategy and Loan Utilization: The Collateral Transfer Facility operated as a short-term bridge loan, enabling the construction company to bridge the funding shortfall and kick-start the housing development. The exit strategy, based on the sale of properties or refinancing in case of non-sale, provided the client with suitable repayment options.

Competitive Rates and Risk Evaluation: The rates obtained for the client were highly competitive, reflecting the Provider’s assessment of the project’s low risk. The residential housing nature of the project, coupled with pre-sales and safety nets, contributed to the favorable evaluation by the Provider, making the collateral-backed facility an attractive financial solution for the Dutch construction company.

This case study illustrates how Redeure’s expertise in securing a Collateral Transfer Facility not only enabled the client to qualify for a tender bid but also provided a flexible financial tool to address potential funding needs during the project. The competitive rates obtained underscore the careful risk evaluation conducted by the Provider, ensuring a successful financial arrangement for the construction company.