The current investment opportunity offers CROWDESTOR investors to make a loan secured to SIA “CR 7”, a fully operational mink farm with a herd of 170 000 units, operating in Grobina district, in a farm previously owned by JSC Grobina.
The essence of the project is to sell the company as a viable and profitable company to an international/local investor. SIA “CR 7” is an SPV established and managed by CROWDESTOR.
Funds will be used as working capital to acquire raw materials, food, and vitamins for feeding the herd. 41 200 units have been already delivered to Kopenhagen Fur in February/March 2020, funds expected to be received in October 2020. The loan will be repaid from the first income. The next delivery is expected to be this year from November 20 until December 10. The next payment is expected to be received and the Working capital loan repaid in December 2020/January 2021.
The valuation of fully operational Business is from EUR 9 million EUR up to EUR 11 million EUR, according to the valuation made in 02.07.2020, which is a period after COVID-19. Loan-to-business value standing at ~43%.
CROWDESTOR investors are offered to make a loan with a 19% annual interest rate. The minimum target to be raised in this fundraising phase is EUR 10 000,00 and the maximum target is EUR 35 000,00. The loan term is 4 months.
Minimum target: EUR 10 000,00
Maximum target: EUR 35 000,00
Loan term: 4 months
Interest rate: 19 % per annum
Interest payments: paid in bullet payment together with the Loan principal repayment
Loan repayment: In full at the end of the Loan Term
Crowdestor Provision fund: Yes
Collateral: 100% of shares of the Borrower with all business value are held on behalf of investors during the Loan period
The borrower is a fully operational mink farm with a herd of 170 000 units operating in Grobina district, in a farm previously owned by JSC Gronina, currently leased with the option to buy out.
The essence of the project is to sell the company as a viable and profitable company to an international/local investor. The Borrower (SIA “CR 7”) is an SPV established and managed by CROWDESTOR.
Funds from this fundraising round will be used as working capital to acquire raw materials, food, and vitamins for feeding the herd. The loan will be repaid once the finished products are physically delivered to Kopenhagen Fur or Saga Furs. Delivery is expected to be this year from November 20 until December 10. The first payment is expected to be received and Working capital loan repaid in December 2020/January 2021.
During 2019 and the beginning of 2020, Kopenhagen Fur has paid 15-18 EUR per each unit once it has been delivered. We expect to receive a 30% lower income comparing to the lowest price in 2019 and 2020, which would result in a total income of 1.78 million EUR income once delivery is done. Funds will be used to pay back short-term loan Purchase of raw materials and finalize the acquisition of assets in case the full amount of funds for this purpose will not be raised in CROWDESTOR, or to pay back partly the long-term loan for Asset acquisition in case full amount will be already raised.
The valuation of a fully operational Business is from EUR 9 million EUR up to EUR 11 million EUR, according to the valuation made in 02.07.2020, which is a period after COVID-19. Valuation made by SIA “Eiroeksperts”, a professional valuer and a member of The European Group of Valuers’ Association (TEGoVA). Loan-to-business value standing at ~43%. In annex – valuation of the Business.
The assets are bought from:
In the previous 3 fundraising rounds, the Borrower has raised 1.78 million out of 2.95 million EUR for Asset acquisition. The rest of the funds are going to be raised during July, August, September 2020.
As the advance payments for sales of fur are currently put on hold by Kopenhagen FUR and Saga Furs, explained more in the Market section, additional working capital for mink breeding currently is being raised in CROWDESTOR. The amount of necessary working capital in this breeding season until November 2020 is 350 000 EUR per month.
CROWDESTOR loan will be repaid: 1) when the Company is sold to the investor; 2) from the income of the sales of products in auction houses; 3) refinanced by a bank loan.
Project name: buy-out assets and assemble them into a fully operational mink farm and sell it as a viable and profitable company to an international/local investor.
Collateral: 100% of shares of the Borrower with all its business values are held on behalf of investors during the loan period.
Total valuation of the collateral: EUR 9 million – EUR 11 million
Total investments raised in CROWDESTOR: EUR 2 950 000,00 up to EUR 4 350 000
Funds raised in fundraising phase 1: 980 000 EUR
Funds raised in fundraising phase 2: 700 000 EUR
Funds raised in fundraising phase 3: 100 000 EUR
Funds raised in fundraising phase 4: 170 000 EUR
Funds raised in fundraising phase 5: 35 000 EUR
Funds raised in fundraising phase 6: 35 000 EUR
Place of business: Lapsu 3, Dubeņi, Grobinas novads
Sell-side information memorandum will be prepared during Q3 2020, and the process of polling potential investors regarding the sale of the company will begin in November 2020. It is expected to sell SIA “CR 7" by mid/end of 2021.
The usual practice in mink farming is that international auction houses like Kopenhagen FUR (based in Denmark with a turnover of 700-900 million EUR turnover during last years) or Saga Fur (based in Finland with a turnover of 300 million EUR turnover during last years) are signing purchase contracts with mink farms for the acquisition of mink fur and issuing advance payments to the farmers for breeding. When advance payment for acquisition is made by the auction house, it is farmers' obligation to sell the product only to the specific auction house. Because of COVID-19, both these dominant auction houses have canceled the auctions, they are in shortage of funds and are not funding any advance payment to mink farms, except some local farmers.
The fact that the auction houses are not issuing advance payments to farmers, means that the farmers worldwide will be facing very difficult H2 of the year 2020 when it will be necessary to finance the breeding. It is expected that many farms will stop operations due to lack of funding, and it is expected that the supply of the mink fur will decline to the historically lowest level in the last 30 years. Because of such a dramatically low supply, it is expected that the prices in 2021/2022 will increase significantly more than previously expected.
As a result of Covid-19 and decreased demand for luxury goods, the fur processing industry was set on a short pause. However, the fact that there haven’t been any auctions of selling the products, means that competitors might stop operations which will result in lower supply and higher prices. As the factory is one of the most modern in the region with one of the lowest production costs, it holds a competitive advantage over other industry players. Therefore, once the impact of the pandemic on people's shopping habits is over and people are ready to buy luxury goods again, the demand for the fur products will increase.
As the previously mentioned advance payments for sales of fur are currently put on hold by Kopenhagen FUR and Saga Furs, working capital for mink feeding will be raised in CROWDESTOR in case cheaper funding from other smaller scale auction houses will not be received.
Working capital historically has been always received from the auction houses, as they issue relatively cheap funding – usually, an annual rate of 5% is applied to the funds transferred to farmers.
Valuation report of the Business
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