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BREAL DEALS. REAL ACHIEVEMENT.

Company: BREAL Zeta delivers watershed £53.4m facility for Highland Spring

Line Size: £53,400,000

Description: Specialist asset-based lender, BREAL Zeta has structured and delivered an innovative £53.4m facility for Highland Spring, including a £28m cashflow loan.

This watershed deal provides a key platform for Highland Spring’s impressive, planned growth as the UK’s market-leading natural source water brand.

Established in 1980 and employing over 400 members of staff, Highland Spring is the number 1 natural source water brand in the UK, producing more than 500 million litres annually. The company sources its water from a protected, organically accredited catchment area stretching over 2,500 acres of the Ochil Hills in Perthshire, Scotland. The business recognises the importance of environmental and sustainable management by using a mere 3% of the annual rainfall in its catchment area.

Highland Spring has delivered strong EBITDA performance through the pandemic. The new facility, comprising of a £15m invoice discounting, £3m inventory, £5.2m plant & machinery, £3.1m property and £28m cashflow loan, will create significant headroom to address further investments in the business, from growing the Highland Spring brand and expanding its product portfolio to supporting its continuing journey toward net zero.

BREAL Zeta led this club lending transaction and partnered with Leumi ABL using an innovative FIFO structure.

Commenting on the transaction, Mark Steven, Joint Managing Director, Highland Spring, said: “We knew we weren’t looking for a standard banking package linked to traditional facilities, but it was difficult to know what good was going to look like, until somebody came to us with something different. The team at BREAL Zeta looked at the investment plans of the business and matched their facilities to the profile that we will need in the future, not just the present. They were supportive, straightforward and pragmatic to work with as a lending partner and succeeded in delivering the innovative deal structure we need to achieve our plans.”

Raed Hanna, Managing Director, MFL Finance Limited, said: “Mutual Finance was delighted to collaborate with all parties on this deal to complete a complicated corporate debt facility. BREAL Zeta showed a proactive and pragmatic approach to structuring the optimal facility for our prestigious client, Highland Spring, in a volatile banking market. This complex solution worked for all and will form the beginning of a strong, long-term lending relationship. Congratulations to everyone who contributed to the successful outcome.”

Annabel Todd, Regional Business Development Director, BREAL Zeta, commented: “We were very impressed by the management team’s vision for the future of the business, which underlined how they have created the leading UK natural source water brand. We look forward to supporting the business in achieving its exciting plans as it looks to expand its product range and consolidate its enviable market position.”

Robert Wakeford, Managing Director, UK Sales at BREAL Zeta, said: “We have provided Highland Spring with an innovative and substantial hybrid ABL and cashflow facility to achieve their objectives. Management and all the advisors in the transaction have worked together seamlessly to deliver what we consider the optimum funding structure that will allow the management team the financial freedom to deliver their plan.”

Addleshaw Goddard provided legal advice to BREAL Zeta. Collateral due diligence was provided by Hilco Valuation Services. BDO and Burness Paull advised Highland Spring on the transaction. Shareholder advice was provided by Mutual Finance.

BREAL Zeta offers structured, multi-jurisdictional ABL facilities from £5 million to £150 million that deliver working capital and corporate structuring solutions.