LTT SME LTD

Technology

Funds Requested

£100,000.00

Offered so far

£0.00

Loan term

36 MONTHS

Auction Closed

2013-10-31

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About the Business

Company Name: LTT SME LTD Company Number: 06937713
Business Type: Technology Years Trading: 4-5 years
Business Location: LONDON

About the Risk

Risk rating

B

Default rate

7.10%

Bad debt rate

5.84%

About the Security

Security Offered:

All Assets Debenture

Est. Equity: 0.00

Risk Indicators Identified:

Important Files

Who are we?

Our company provides bespoke datacentre and cloud services to SMEs across Europe. We generally provide a full turnkey service to our customers taking their concepts and turning them into reality irrespective whether solution requires programming, engineering or datacentre services. We focus on specific niches where we can draw on our twenty years of real world experience for the benefit of our customer.

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Loan Offers

What is the loan for?

Last month, we requested and were subsequently funded for £30,000 here on Rebuilding Society. We appreciate the lenders who stood behind us to make that happen. We completed our new datacentre build out 10 days ahead of schedule and well within budget. We have also acquired a number of additional assets, including £90,000 of storage for just under £10,000, boosting our existing asset base as shown on our accounts. This has allowed us to start pursuing some additional customers in Switzerland and France who have wanted to use our data-warehousing services. We expect to go into testing with these customers early next month with billables starting in January. We see no barriers to acquiring these customers. Seven days ago, we were presented with a prime opportunity to expand into the New York market as one of our suppliers is ceasing their operation in US to concentrate on Europe. We have been discussing entering the US market directly for the past two years but have been waiting for the perfect opportunity to do so. This is that opportunity. We have entered into informal negotiations with them and have structured a deal where we get to take over their existing datacenter lease which is pegged at around 50% off the current market rate; and take over their equipment at around 10c on the dollar. Additionally they have a number of customers who can transition as well; but we will not be paying them for any goodwill or ‘kickback’ – its purely an asset purchase at way below market rates. We know the owners of this organization, we have sent one of our engineers into the facility to go through the equipment and value it; we have confirmed its in ‘as-new’ condition. The owner of the property has confirmed there will be no issue transferring the lease/license to us and have been assured that they will accept us taking over the lease and will maintain the current rates for the remainder of the agreement. At the end of the contract period, we can continue in the space for another 2 or 5 year period with a 25% increase on the rental rate. This still maintains the site at well below market rate. The asset value (based on EBay prices – I prefer to use this as it reflects the market prices rather than an inflated vendor pricing model) is around $500,000; we will to pay $50,000 maybe less. I have not entered any aggressive negotiations, as I prefer to do that once we have the funds in-hand so we can execute a purchase agreement without delay. We have a gentleman’s agreement that they will not offer the assets to another party until month-end so time is very tight. But I am confident that we will find a way to complete this purchase. It is our intention to borrow £100,000 and use a third of this to pay off the existing Rebuilding Society loan of £30,000; this will leave us with £70,000 to make the acquisition, hire a local sales engineer and install network between London and New York so that we can not only improve network connectivity for our US visitors accessing our European datacentres; but also for Europeans accessing our new US datacentre. The objective of the US expansion is to augment our existing European infrastructure, this will let us enter the ever-so lucrative US cloud market which we are seeing an exceptionally strong demand for. Some of our European customers are looking around for US solutions and until this opportunity came up, we have been placing them with Amazon’s Cloud service or in some cases HP’s cloud. The assets being purchased equate to about 500 servers, 100TB storage and the associated networking equipment. This will give us about 18 months immediate room to grow.

Why consider investing?

Historically our business has been built without loans or debts - we expanded organically and through self funding. About two weeks ago we took a small loan from Rebuilding Society members for £30,000. It is our intention to use this new loan to pay off that original loan early, leaving us with circa £70,000 to complete this acquisition and give us working capital to hire US based sales engineer and begin aggressively bringing in customers from that market. I personally have 10+ years experience in the US market, I don’t foresee any issues bringing the US operation to profit within 6-9 months. I know it sounds optimistic but we have been preparing for this eventuality for nearly two years. We have offered a debenture as security on all the assets – this would include both the European and US assets. Those who are not accustomed to US-based asset security, please note that in my experience the US is a lot easier to recover against assets than Europe. So in the event of default, it would be a simple recourse to secure the assets and either sell the business as a going concern or liquidate the assets. The asset value far exceeds the amount being borrowed. All of our primary customers are long term customers - many 10+ years and have signed another five year contract in order for us to make our recent expansion for an additional datacentre location. Whilst our management accounts from July to present are not yet available, our turnover since June is showing further growth on last year. We have discussed this expansion with a couple of our close customers to ask them whether they would support this by moving their current US servers from Amazon AWS to our new platform. Both confirmed they would infact prefer to use us exclusively to handle both Europe and US for them.

DateAmountCapitalInterestReceived
01/12/2013£3,511.26£2,185.43£1,325.83
01/01/2014£3,511.26£2,214.40£1,296.86
01/02/2014£3,511.26£2,243.76£1,267.50
01/03/2014£3,511.26£2,273.51£1,237.75
01/04/2014£2,777.78£2,303.65£0.00
01/05/2014£2,777.78£2,334.20£0.00
01/06/2014£2,777.78£2,365.14£0.00
01/07/2014£2,777.78£2,396.50£0.00
01/08/2014£2,777.78£2,428.28£0.00
01/09/2014£2,777.78£2,460.47£0.00
01/10/2014£2,777.78£2,493.09£0.00
01/11/2014£2,777.78£2,526.15£0.00
01/12/2014£2,777.78£2,559.64£0.00
01/01/2015£2,777.78£2,593.58£0.00
01/02/2015£2,777.78£2,627.96£0.00
01/03/2015£2,777.78£2,662.80£0.00
01/04/2015£2,777.78£2,698.11£0.00
01/05/2015£2,777.78£2,733.88£0.00
01/06/2015£2,777.78£2,770.13£0.00
01/07/2015£2,777.78£2,806.86£0.00
01/08/2015£2,777.78£2,844.07£0.00
01/09/2015£2,777.78£2,881.78£0.00
01/10/2015£2,777.78£2,919.98£0.00
01/11/2015£2,777.78£2,958.70£0.00
01/12/2015£2,777.78£2,997.93£0.00
01/01/2016£2,777.78£3,037.67£0.00
01/02/2016£2,777.78£3,077.95£0.00
01/03/2016£2,777.78£3,118.76£0.00
01/04/2016£2,777.78£3,160.11£0.00
01/05/2016£2,777.78£3,202.00£0.00
01/06/2016£2,777.78£3,244.46£0.00
01/07/2016£2,777.78£3,287.47£0.00
01/08/2016£2,777.78£3,331.06£0.00
01/09/2016£2,777.78£3,375.22£0.00
01/10/2016£2,777.78£3,419.97£0.00
01/11/2016£2,777.78£3,465.32£0.00
Total:£100,000.00£5,127.94