The UBO of our client is a high-net-worth entrepreneur based in Jersey whom we had lent to in previous years. The aim was to assist the client in purchasing an old lodging house, which had planning permission to convert to residential. They planned to redevelop and sell in favourable conditions.
The loan was provided to a Jersey-based company, ensuring stringent regulations and industry best practices protected the client’s and the lender’s interests. To bolster security for the loan, we employed multiple measures:
First Ranking Charge: The loan was secured with a first-ranking charge over the subject property.
Share Charge: Additionally, we implemented a share charge over the company that owned the property.
Personal Guarantee: We obtained a personal guarantee from the client to provide more confidence.
With all necessary arrangements in place, we advanced a loan of £2.65m to the client. The loan terms were agreed upon with an 18-month term, with interest serviced quarterly.
An upside of this particular transaction was we funded this loan using our co-funder model. In this case, we charged the Borrower 9.5% per annum and syndicated the loan with Co-Funders, to whom we pay 8.5%. A key benefit for our co-funders using this method is not only to receive a higher return on their capital than cash rates but also the ability to select loans that suit their risk profile. Interest serviced on a quarterly basis is an added benefit for those seeking additional cash flow. As this was an “all Jersey” transaction, many of our co-funders were aware of the Borrower or knew the property that forms part of the security package, which provides added confidence in the process.
Structuring a well-designed loan for a Jersey-based Borrower, securing it with valuable Jersey assets, and funding it with cash held in Jersey is a transaction that stimulates the island itself – another innovative financial solution powered by Tenn Capital.