Supply@ME Capital PLC (LSE:SYME) (SYME) said the first Inventory Monetisation (IM) transaction has been executed using traditional funding sources and the second to use the company’s platform so far.
With IM designed to generate cashflow for the client based on the value of warehoused goods, this transaction has a duration of three years and is expected to earn SYME’s subsidiaries roughly 2.7% of the gross value of the client company's inventory to be monetised.
Chief executive Alessandro Zamboni said it “confirms that we are continuing to achieve the upper range of our expected returns” and both validates the model and “clearly evidences the value which we can assist corporates, funders and client companies to unlock”.
He added: “The structure of the contractual agreement we have facilitated will provide a blueprint for future IM transactions using traditional funding sources in Italy, backed by the PNP Regulation, opening the door wide open to others in our pipeline and boosting the finalisation of white-label agreements with banks.”
For this agreement, an institutional investor providing a binding commitment to invest in the IM transaction, the Italian client company will monetise an initial €650,000 tranche of its warehoused goods, with a €550k planned second tranche aimed by the end of 2023 and a potential increase up to €10mln of eligible inventory given first refusal to SYME’s StockCo arm for the remainder of the three years.
SYME’s Supply@ME Italy has an operating agreement with StockCo which includes an annual inventory servicing fee and, additionally, will charge the client company an up-front origination fee. Meanwhile, Supply@ME Technologies, the owner of the IM intellectual property rights and platform provider, has a licence agreement with StockCo and will charge an annual platform fee.
The platform will be used by the client to upload inventory to be monetised, integrate and transfer the enterprise resource planning data to allow the necessary monitoring and inspection activities by StockCo, supported by Supply@ME Italy.
StockCo, in turn, shall issue a bond subscribed for by the institutional investor, with security comprising of a non-possessory pledge on the inventory owned by StockCo, which leverages the recently approved Italian legislation pegno non possessorio (PNP).