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.