hasn’t taken off as one would have expected over the last ten to fifteen years.
It’s grown, but, in my opinion, it’s still
relatively small compared to what we
see in the United States.
And I think the reason is that, in the
UK, you’ve always had factoring/ invoice
discounting, and you’ve got the four
or five major banks that dominate that
market. It is very difficult for anybody
else to break into the market in a meaningful way. So we started, as I mentioned
in the first question, financing inventory.
That was our unique selling point.
The main clearing banks here
dominate corporate lending in the UK
and they just didn’t consider it necessary
to develop this comprehensive asset-based product. They’re slowly getting
into it. Lloyds, for example, is the one
that’s embracing it more than the
other big banks, although they possibly
don’t do inventory in the way we do.
Business Money magazine still refers to
Burdale as the “trailblazer” of asset-based lending in the UK. And I think it’s
simply moving out from receivables to
inventory and other assets, but, as I say,
it hasn’t grown as much as one would
have imagined. And you can see this
by the fact that a number of U.S. banks
came and went over the past 15 years.
Bank of America’s team is very small.
GMAC and GE have bought businesses,
and they’re probably the most
successful of the Americans here.
We set up a UK-based Comprehensive
Asset Based Lending business for what
was Congress Financial and now Wachovia, and then we sold the business. The
volume is not that exciting for American
lenders, or otherwise more of them
would have been here.
But coming on to the current
crisis: there has been an uplift in the
volume of business, but it’s not nearly
as significant as one would have
imagined. I think that there are a lot
of companies that are over-borrowed,
and the asset-based lenders can’t give
enough availability to take out the
existing lenders. They’re probably so
far under water that they don’t want to
precipitate or change anything.
As I see it, the asset-based lending
market can be divided into two main
areas: the one being typical bank-type
ABL and the other being the turnaround
and restructuring arena. I think the
vast volume of asset-based loans over
the last five-to-eight years in the big
leveraged buyout deals in the US was an
aberration and it is unlikely to return in
the same way. Burdale positions itself
very much in the restructuring, refinancing world because the banks in the UK
will do everything else.
Formerly, Burdale’s majority owner was
the U.S. bank Wachovia. Currently, your
company is owned by the Bank of Ireland.
Do you see different attitudes towards
ABL between the two?
It didn’t surprise me, but I think the
market was surprised that Bank of
Ireland would embrace and understand
our product, but they did, very well, very
quickly. This is evidenced by the fact
that, since their acquisition of Burdale,
we have been able to underwrite large
and complicated transactions.
The credit people very much trusted
and relied on our track record and have
embraced it. So I do have to say that,
as far as we’re concerned, there wasn’t
much of a difference. That did surprise
some of our competitors in the market.
They all thought this conservative Bank
of Ireland wouldn’t take to ABL, and they
are a conservative bank, correctly so, but
they understood it and realized we knew
what we were doing.
One of the highest profile deals Burdale
has been involved with was Woolworth’s,
which went out of business early this
year. Do you feel that Burdale and ABL
in general were fairly portrayed by the
media in the Woolworth’s situation?
I have had contact with the media for
many years because I needed to promote Burdale and asset-based lending.
I am happy to speak to the media, and
I think it can be misleading when the
media don’t have the full story and get
the facts wrong. This can be further
complicated by our policy, which we will
always adhere to, to never speak about
Can you give me a bit of background to an
article which appeared in The Telegraph
about your Woolworth’s connection?
Well! For three days, the headline of
the online version said, “The Man Who
Hastened the Demise of Woolies.” The
published version said, “The Woolies
Man Gives his Side of the Story.”
The Telegraph wasn’t the only newspaper covering this story, but they were
the one following this for many months.
We couldn’t speak to them, client
confidentiality and all of that. However,
they approached us looking to write an
article on asset-based lending and the
intricacies of how it works. Whilst the
key motivator was the ongoing coverage on Woolworth’s, and the journalist
understood that we would not speak
about an individual customer, but
wanted to get a balanced view as to how
I initially didn’t realize that the
article, the one in which my photograph
appeared, was going to be more a profile
story on me as opposed to merely focused on ABL.
Having said that, we’ve got nothing to
hide. We asset-based lenders don’t like
to foreclose. It’s the last thing we want.
You can’t expect journalists to have
all the information. You can’t expect