Chairman charges Coral 10% interest on loan
CORAL Products has raised new loans worth £500,000 which has helped it to pay down an existing bank loan and increased working capital.
The Skelmersdale-based company has agreed a £350,000, three-year asset purchase loan with Close Brothers Asset Finance and a £150,000 loan from company chairman Joe Grimmond. The asset purchase loan has been agreed on normal commercial terms, while the unsecured loan from Mr Grimmond attracts an interest rate of 10% per annum and is repayable by the end of August 2013.
Coral Products said it had incurred “significant capital expenditure” in the second half of the year to April 30 as it tooled up to produce a new range of food packaging products.
The company had arranged a term loan of £1.4m in August last year to finance part of its purchase of packaging firm Interpack. It was due to be paid in 24 instalments and by May 31 £900,000 was still outstanding.
All of the new funding has being used to pay down its existing bank debt early, which has persuaded the firm’s bankers to increase its working capital facility by £800,000.
The company said the deal would allow it to fund growth plans over the coming months.
Within the past 18 months, Coral Products has sought to move away from its previously core activity of producing CD and DVD jewel cases as the market for them diminishes and replace them with other income streams by producing food packaging products and recycling containers for local authorities.
The firm said that its directors had consulted with advisors Cairn Financial, and had deemed the terms of Mr Grimmond’s loan as “fair and reasonable insofar as the company’s shareholders are concerned”.
