Provided purchasing and restructuring funds in collaboration with megabanks and government financial institutions

Apparel retailer company D, which had more than 1,000 stores in Japan, had dropped 15% in sales over the last two quarters and posted a total deficit of 10 billion yen. The outflow of cash continued, and the company’s cash flow was tight.
As a result, there was a shortage of funds for purchasing products for winter sales, which is typically the time for apparel companies to earn money. It was necessary to raise funds without any prospect of funding advance payments for layoffs to carry out structural reforms led by the company’s main bank.
The company’s main banks were two Japanese megabanks (in parallel), and the existing loans were covered by real estate collateral. Both banks requested Gordon Brothers Japan (GBJ) to consider financing using ABL in a situation where it is difficult to provide new credit that is unsecured or dependent on inventory collateral.

GBJ valued the inventory and provided a total loan of 2 billion JPY based on the appraisal.
Existing financial institutions provided credit under a new commitment line, and GBJ provided additional financing using term loans. After concluding a bilateral contract with Company D, GBJ’s repayment position was subordinated using an intercreditor agreement.
The first-priority position was further secured using a government bank loan guarantee scheme.

GBJ worked with government financial institutions to take risks that depend on the value of inventory, and on behalf of existing financial institutions that cannot provide new money, GBJ provided purchasing funds and restructuring funds that were essential for business continuity.