Asset Based Lending

Name: Asset Based Lending
Availability: InStock

Gain expert insight into asset based lending, one of the fastest growing segments of the European credit market, and understand why borrowers are increasingly choosing ABL over traditional cash flow lending

A detail of the London Tower Bridge showing the blue color and the iconic towers

Live virtual class | Delivered over two half-day sessions | 7 CPD hours

Book Places Now

In-house pricing available – often more cost-effective for teams of 10+

Download: Course Outline

Develop a thorough understanding of how ABL facilities are structured across the UK, Europe and key international jurisdictions, including borrowing bases, advance rates and collateral valuation, and why ABL is attracting borrowers seeking greater flexibility and higher leverage against assets than traditional cash flow lending provides
Develop practical skills in debt advisory for ABL transactions, including borrowing base analysis, lender selection, and structuring trade-offs between ABL and cashflow lending and key intercreditor issues re competing collateral claims and lender enforcement agendas
Improve your ability to assess and manage risk across different asset classes, including receivables, inventory, commodity and raw material collateral, and the specific challenges each presents

Part One

Introduction

Two approaches to the credit decision
- Cashflow-based lending
- Asset-based lending (ABL)
A summary of corporate funding options
How ABL is distinguished from other asset-related finance techniques
- Asset-backed lending
- Asset finance compared
Which types of firms are not suitable for ABL
Key concepts in Asset-Based Lending
- The 'Borrowing Base'
- The Advance rate
- 'Headroom'
- The Reserves
Use and application of the ABL revolving credit facility in banking
- M&A
- Restructuring
- General corporate purposes
- Other

Collateral in ABL: Why and How it Matters

This ABL training explores the role of collateral
Key issues
- Ranking/priority
- Control of the collateral
Why share pledges matter
Fixed and floating charges
Key differences
Issues with floating charges (affects the UK only)
- Why are they essential to ABL & other lenders?
- What is a floating charge, and what assets does it cover?
- Floating charge pros & cons
- Differences between the Floating Charge Holder and the Qualifying Floating Charge Holder; why this matters
- Review key cases: Spectrum, Avanti, Agnew
Crown Preference issues (affects the UK only)
- Who and what it affects
- Specific problems it has created
  - Blocked asset sales
  - Restructurings (CVAs more challenging)
  - Increased costs
  - Lower advance rates
  - Reduced flexibility for borrowers
  - Enhanced reporting & valuations
- Issues with collateral in the EU / Key differences to the UK
  - ROT issues in Germany, Austria
  - No floating charge
  - Employee priority (Italy)
  - Enforcement challenges
  - Additional Reserves (Germany, France, Italy)
  - Mitigating factors in the EU

Financing Accounts Receivable ('AR')

The basic approach
Asset-backed loan vs debt purchase structure
- Confidential Invoice discounting
- Disclosed Invoice discounting
- Full-service Factoring
Key differences between discounting and factoring
Critical legal issues for lenders
Key accounting issues - off-balance sheet or not requirements
- Recourse vs Non-recourse
- Credit insurance – key issues and tips
Ineligible AR – review of typical ineligible
Review of pro forma funding calculation
Other typical limits
Typical Reserves
Dealing with commodities and other volatile raw material inventory
- Specific categories – agricultural commodities, precious metals, chemicals
- Challenges with fixed advance rates & potential solutions
- Dynamic advance rate structures
- Two-tier advance rates linked to hedging
- Reserves specific to commodity collateral
- Commodity-specific structuring
- Key documentation provisions
Case Study: Calculate the effective advance rate on AR

Inventory Financing

ABL training assesses what types of inventory qualify for financing
- Finished goods
- WIP
- Raw materials/commodities
Pro-forma funding calculation
- Inventory valuation vs funding valuation
- Gross Orderly Liquidation Value vs. Net Orderly Liquidation Value
Typical list of ineligible stock
Calculating the Advance
Key risks for the lender
- Collateral - Fixed or Floating charge
- Value leakage
- Retention of title issues
Issues arising from the Crown Preference and how lenders have responded
Specific reserves that may affect recoveries re: inventory
- Prescribed part
- Crown preference
- Landlord’s “distraint”
Risk Mitigants
- ‘All monies’ clause
- ‘Mixed Goods’ clause
Insurance issues
Key risks for the lender
- Ownership/title issues
- Is it a Fixture?
Specific issues with 'branded' products

Part Two

Supply Chain Financing (Reverse Factoring)

Key steps in the process
Key benefits:
- For suppliers
- For buyers
- For funders
Risk mitigation
Typical examples

Plant, Machinery & Equipment

What types of PME qualify
Typical terms of the facility
- Margins, amortisation and tenors
- Recent developments
Key concerns for the asset-based lenders
- Ability to sell/relocation
- Nature of PME – is it specialised/industry-specific?
Advance rates
Pros and cons of other forms of funding (leasing, vendor finance)
Legal issues – Taking adequate security
- Plating (why it isn’t always an option)
- Attachment – is it a fixture or a fitting
Lessons from the Arena TV case

Real Estate

What types of property qualify?
Advance rates
Valuation issues
Key terms of the ABL facility loan
- Margins, amortisation and tenors
Pros & cons of using asset-based lending vs specialist lenders
Legal issues – taking adequate security measures

Intangible Assets

What types of intangibles qualify?
The rationale for leveraging intangibles (unlocking hidden value)

Cash Flow Based Loans

Typical terms, tenors and margins
Recent trends re: cash flow strips
- Rationale
- Balloons
- Payment holidays
- Extended tenors
Potential pitfalls for the parties

Annual Recurring Revenue ('ARR')

What are they?
Use and application
- Typical sectors
- Typical assets
Calculating the borrowing base
Calculating the Advance rate
Documentation issues
- Financial maintenance covenants
- Other key commercial terms

Documentation: An Overview of a Typical Term Sheet

Review of main headings
The security package
Information & Reporting requirements
Financial covenants
- Why and when
Operational undertakings
- Defining 'dilution'
Reps and Warranties – typical
Events of Default
Fees/charges (one size does not fit all)
The lender’s approach to margin, fees/charges
Other costs and expenses
Exit/termination fees
- Typical' fees – review various options
- Typical triggers
- Issues for borrowers to consider (potential pitfalls)

Debt Advisory – key considerations in the use of ABL

Asset based lending courses at Redcliffe explore when to recommend ABL: identifying the right borrower profile and asset base
Typical sectors and borrower types
- Manufacturing, wholesale distribution, equipment rental, and inventory-rich businesses
- Alcoholic beverages, food and drink, and consumer goods (whisky, wine, and similar asset-rich businesses)
- Firms with strong AR, commodity-linked inventory, or significant capital equipment
ABL vs cashflow lending — structuring trade-offs, pricing dynamics, and when a hybrid structure adds value
Advantages and disadvantages of ABL — what debt advisers need to explain to clients
- Enhanced liquidity tied directly to asset value; availability grows with the business
- Can provide cheaper or more flexible funding than a conventional RCF
- Often accessible where traditional cashflow lending is unavailable or constrained
- Onboarding burden, ongoing reporting, and cash dominion — managing borrower expectations
- Availability can contract rapidly if asset values or debtor quality deteriorate
Key diligence questions for debt advisers: asset quality, debtor concentration, ineligibles, and historic utilisation
How lenders assess and stress-test the borrowing base — what advisers need to anticipate before going to market
Use in restructuring and M&A
- ABL as a rescue or stabilisation facility in distressed situations
- Super-senior ABL revolvers alongside term loan B and unitranche structures in leveraged buyouts
- Adding an ABL tranche to an existing structure or refinancing out of cashflow lending
Key intercreditor issues for the debt adviser
- Security — resolving competing claims over collateral between the ABL lender and other creditors; review of typical approaches
- Enforcement standstills — managing conflicting agendas between the ABL lender and other funders
- Option to purchase — what it is, when it arises, and whether it helps
- Consents and waivers — navigating the ABL lender's approval rights in a multi-creditor structure
Market overview: bank lenders vs fund-backed and non-bank providers — differences in appetite, pricing, advance rates, and flexibility
Case Study: Review key conflict issues between the asset-based lending process and other funders
Case Study: Advising on an ABL refinancing — identifying the optimal structure and lender universe

An ABL consultant, public speaker and author delivers Redcliffe Training's asset based lending courses. With expertise in private equity, debt advisory, restructuring and infrastructure, he is a Senior Advisor to KPMG Finland, a Senior Advisor to Reorg EMEA Covenants, the leading provider of information to the European High Yield community, and a Senior Consultant to Grant Thornton UK.

He delivers training programmes to a wide range of blue-chip clients in Europe, Africa, the Middle and Far East, North America and Australasia. In-house clients include:

Banks (BNP Paribas, Société Générale, ING, Barclays Capital, Bank of China, RBS, SEB),
Personal asset based lending lawyers (Baker & McKenzie, Skadden Arps, Sullivan & Cromwell, Cadwalader, Latham & Watkins, Weil, White & Case)
Advisory firms (Lazard, PWC, M&A International, KPMG, EY, Deloitte)
PE firms (Cinven, Advent, Barings Asia, Waterland), corporates (Siemens, Airbus, Turkcell, Candy Crush, Gunvor, Statkraft)
and governmental bodies (the UKLA, the EBRD, the ECGD, Omani Oil Corp)

He qualified in South Africa as both a Chartered Accountant with Deloitte and as an ABL lawyer with Hofmeyr. He helped structure several high-profile project financings, including BMW 3 Series, Ford Sierra, GM, Sappi and Mondi.

After a wide range of public and private transactions, he moved to London and joined Lazard Brothers as a corporate finance executive. He joined Hoare Govett as an assistant director, where he acted as an advisor to smaller listed companies and helped in several syndicated Euro-Equity Initial Public Offerings.

In 1991, he joined ABN Amro’s cross-border M&A team before transferring to MeesPierson Corporate Finance as a Director in Cross-Border M&A. He was also involved in several deals in Central Europe. During this time, he was a member of the EU-PHARE programme and advised the Estonian government on its privatisation programme.

Our ABL course expert is the Programme Director at the City Business School, London, for Infrastructure Finance in the MSc programme in Business Administration and Finance. He is a member of the Institute of Chartered Accountants in England & Wales and the South African Institute of Chartered Accountants.

He completed a BA and an LLB at the University of Natal and a B.Compt. (Hons) at UNISA.

Gain an appreciation of the asset-based lending process in tandem with other funding sources
Understand when Asset-Based Lending is and is not suitable, as well as the choice of funding
Master the key intercreditor issues applicable to ABL
Understand the financing of accounts receivable (AR) in ABL
Know the relevant issues in revolving inventory and plant, machinery and equipment
The relevance of ABL to real estate, including a comparison with specialist lending
Asset based lending training also includes an overview of a typical term sheet and commentary thereon

ABL courses at Redcliffe are for:

Professionals involved in deals with ABL:
- Lenders providing ABL
- In loans where ABL is present
Lawyers advising lenders or borrowers on ABL
Private Equity professionals who may use Asset-Based Lending
Corporate financiers
M&A advisors
Debt advisory and Restructuring professionals

Background

In recent years, ABL has gained traction in Europe as well as globally. Borrowers have sought broader funding solutions in the face of challenging economic and geopolitical conditions. Competitive pricing versus traditional working capital facilities typically provided by RCFs from banks, which have become more expensive as interest rates have escalated, has boosted interest from borrowers.

Commitment fees are also much lower. Increasing acceptance as a funding option, especially by PE sponsors. ABL lenders have worked hard to offer greater flexibility to borrowers, e.g. by providing committed facilities and a higher proportion of cash flow strips as part of their funding package. Sector specialisation in ABL providers. The rise in specialist providers with deep knowledge of specific industries has allowed these lenders to provide tailored funding solutions to meet borrowers’ needs. The challenging economic climate caused by COVID-19, geopolitical events, and dislocation in energy markets has boosted risk aversion in traditional lending.

ABL, with its focus on asset values which endure post-distress, offers lenders a lower level of risk and higher recoveries post-default. Technological developments have made ABL more efficient and data-driven. Asset-Based Lenders increasingly use software to streamline asset valuation and monitoring, which has improved decision-making and reduced risk.

Challenges in ABL:

Despite these benefits, ABL has a greater complexity in bifurcated deals, especially in structuring the intercreditor issues between ABL and traditional cash flow-based lenders.
ABL relies on collateral - primarily on the value of their collateral so lenders are keen to ensure they have full control over their assets pre and post-distress and the fact that it.
Lengthy Initial setup takes longer as lenders need to audit the paper trail and appraise the asset values.

The course was very interesting and helpful.
The course was fantastic - lots of details and slides prepared ahead of time with specific/applicable examples. The trainer was brilliant, lots of knowledge, was very engaging and importantly brought real-life applicability into it, which was great.
Good knowledge of the product/market and strong examples.
I gained a great overview of the field of asset-based lending, and the speaker was very knowledgeable.
The course was really good. The coach was very knowledgeable. The delivery of the course was effective, very clear and had relevant examples throughout. Overall, the content was engaging, insightful and genuinely refreshing.
Michael was a great instructor, very knowledgeable, personable, and able to link the ideas he was teaching to real-world examples.

Request a fee quote for an exclusive in-house presentation of this course

Request a fee quote for a pre-recorded course
(min. 50 participants)