£3-15m mini-bond issue
Ocean Capital provides long-term lending solutions to medium to large sized companies in selected industries, predominantly in Europe. Preferred clients are companies tightly managed by shareholders or less cyclical utilities. It seeks to generate attractive levels of income by focusing on the junior tranches of lending, managing the risk with asset backing and control of the lending structures. Ocean Capital was formed in 2002 and has an experienced management team. The ongoing capital and funding constraints on traditional providers of corporate funding should support the demand for stable, diversified sources of funding.
Overview of business
Over the past 10 years Ocean Capital has provided approximately £200m of loans to industrial and manufacturing businesses and financial institutions. It sources, structures and invests in financing solutions that are an alternative to traditional bank lending, asset-backed finance and factoring. Management believes that the corporate sector has begun to plan for future investment needs in the middle of a continuing paucity of traditional sources of finance. The proceeds of the bond will provide support for future lending.
Collateralised junior lending
A typical transaction involves the creation of a special purpose vehicle (SPV) to acquire assets (eg trade receivables, inventory, plant and equipment) from the client and hence improve the customer’s liquidity position. The SPV in which Ocean Capital focuses on the junior tranche receives its remuneration from the operation of the assets, which remain managed by the client, but tightly monitored, and the SPV controlled by Ocean Capital.
Risks on the bonds
The three-year bonds will not be transferable and will not be redeemable. On page 6 we detail the main market and company-specific risks to interest payments and capital return.
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