Nedbank on Thursday announced that it had finalised the terms of a R1.65-billion multifaceted funding solution with Pietermaritzburg-based aluminium manufacturer Hulamin.
The solution would allow Hulamin to consolidate its existing finance products and would provide it with the flexible and affordable funding structure it needed to grow its future market position in volatile currency and metal pricing environments.
“The complex financial solution provided to Hulamin was achieved through close collaboration between a number of the bank’s divisions and comprises three independent, but interlinked, components,” Nedbank Capital mining and metals investment banker Paul Miller said.
The first component of the solution comprised a R650-million six-month, short-term bridging facility arranged by Nedbank Capital’s resources finance team, that would be used by Hulamin to refinance two existing facilities from other institutions that currently held security over the assets of the organisation.
The second component involved the provision of a three-year structured metals inventory and receivables facility to the value of R1.2-billion that Hulamin would use to finance the working capital requirements of its trading operations, including the maintenance of its aluminium inventories and local export trade activities.
Further, Nedbank Corporate would also, through the third component of the solution, provide Hulamin with a R250-million, 360-day-notice general banking facility and a R200-million foreign exchange facility.
“The banking facility will cater for ongoing regular payments, including payroll, utilities, taxation and minor capital expenditure. With around 70% of sales being exported, the foreign exchange line will be an important tool to hedge Hulamin’s substantial foreign currency exposures,” Nedbank stated.
Miller added that the Nedbank teams involved in structuring the finance agreement recognised at the outset that an integrated solution was a priority.
“By successfully combining a short-term loan with long-term working capital finance and day-to-day banking facilities, this integrated solution from Nedbank not only affords Hulamin a seamless transition from its existing, less flexible funding structures, but also creates a sustainable economic environment in which it can further entrench its market and industry leadership,” he said.
Hulamin CEO Richard Jacob stated that the solution went beyond merely meeting Hulamin’s financial requirements in terms of its ongoing operations.
“The solution from Nedbank allows us to effectively manage liquidity risk while affordably funding our working capital cycles, without compromising our future growth potential or development plans,” he said.
Meanwhile, Miller pointed out that Hulamin’s position in key markets, as well as its sustained operational strength were key considerations for Nedbank in its decision to extend the facility.