Partnering with UK Export Finance, Barclays was able to help Mechatherm use a Bond Support Scheme to fulfil its commitments and secure a contract with Alba.
Mechatherm International Limited is a leading provider of equipment for the aluminium and other non-ferrous industrial sectors. With an annual turnover of £8 million in the 2016/17 financial year, anticipated to more than double in the next, international sales have been central to the company’s success. Mechatherm has won the Queen’s Award for Exporting three times.
Mechatherm exports to countries across every continent, but has found particular success in the Middle East. In 2017, the company was approached to supply aluminium-melting furnaces and equipment under a multi-million dollar contract with Aluminium Bahrain (Alba).
Mechatherm needed sufficient working capital to allow it to fulfil the order, so the buyer offered part of the payment upfront. However, the terms of the export contract required Mechatherm to provide an advance payment guarantee, as well as a performance bond from Barclays as reassurance for the buyer that Mechatherm would deliver on its commitments.
In order to issue bonds, there is usually a requirement for a cash deposit, to offset the risk of default on the bonds. This meant that, due to the high value of the contract, it was unfeasible for Mechatherm to be able to both put up the cash for the deposit and still retain sufficient liquidity to fulfil the contract.
Barclays is partnering with UK Export Finance who were able to help Mechatherm secure the deal using its Bond Support Scheme with a guarantee for 80% of the value of both bonds being offered, ultimately freeing up the cash the company needed to deliver this important piece of business.
As a result, Mechatherm was able to successfully secure the contract with Alba, a significant one within the context of a challenging period for the aluminium industry, as well as secure its reputation as a quality supplier in the region. The company was also able to increase its headcount, and is now making preparations to grow its exporting efforts in the Middle East, including the planned opening of a Dubai office.
Barclays is committed to providing support and guidance to exporters and to signpost them where and when needed so you get the right support from the right people at the right time.
Through discussions with your bank and professionals and agencies such as DIT, UKEF, The Institute of Export, and the Chambers of Commerce, importers and exports can move into the world of international trade with genuine confidence.
Without the UKEF guarantee, we simply wouldn’t have had the financial flexibility to afford the deposit required of us and we would have been forced to turn the contract down. We’re extremely grateful for the support given to us by Barclays and UKEF - the fact that we were able to take on this order has been a great success for the company.
With an international network of local trade specialists, we offer a range of solutions to help you execute and expand your trading activities with confidence.
To discuss your business requirements and how Barclays can support you, contact us today.
