Loan to a US company which owned a US property to release funds for a committed purchase.
Introduced by a broker, our client, a UK national, and Cayman resident had committed to purchase a new build residential property in the US. He is a high-profile tech entrepreneur with several businesses in early-stage growth in the US and Europe. He also owns a high-value residential property via a US company which was free of debt.
The purchase was agreed at a time when there was harmony and peace in the US mortgage market and it was anticipated that securing traditional finance would be a simple thing.
Of course, in the time that passed since agreeing to buy the property, there has been a seismic shift in credit availability in the US caused by the problems in the US banking sector – as a result, a simple mortgage for the property was not available plus the businesses were demanding more of the clients capital than usual.
To solve the short-term liquidity problem, we offered a 12-month loan of $4.5m to the company which owned the high-value property – the security was at a company level, supported by corporate and personal guarantees. Given the strength of the security here, we did not need to register a charge over the property directly.
The funds from our loan were then used to complete the committed purchase before the deadline. The borrower intends to sell this new property and use the proceeds of the sale to repay our loan and replenish our funds.