Working with broker firm Arrowsmith Finance, Export Finance Australia was able to provide their client, Mackenzie Marine & Towage, with a loan to support their export supply chain operations.
In 1972, the first towage contract for Western Australia’s Port of Esperance was awarded to the late Don Mackenzie.
Fast forward to 2019, and the family business he founded, Mackenzie Marine & Towage (MMT), works in partnership with Southern Ports, moving large vessels safely into harbours on the southern coast of Western Australia.
In 2016, MMT was awarded the contract to supply towage services to the port of Esperance & Bunbury by Southern Ports Authority. MMT’s finance broker, Simon Munrowd-Harris of Arrowsmith Finance, said winning the Bunbury contract was a very positive outcome – and not only for the company.
“MMT took over Bunbury Port from an international player,” he said. “So it was a very good result for the locals within the community.”
To carry out the new contract, MMT purchased new tugboats from Netherlands ship building company, Damen, at a cost of about $10 million dollars each.
In mid-2018, there was a reduction in alumina exports due to lack of product. In addition to this, iron ore exports out of Esperance ceased around the same time due to a change in mine operators. The reduction in vessel numbers at both ports impacted cashflows.
The business needed working capital support to maintain its operations. They approached their bank for the funds – but the bank declined to extend existing facilities.
Fortunately, Simon knew about the work Export Finance Australia did supporting Australian exporters and businesses that are part of an international supply chain.
“One part of the supply chain is to help arrange for export to happen. For example, you might have a contractor who is hauling ore to a port, and this ore is then being exported. Therefore, you can use Export Finance Australia’s services to help support that business – because ultimately it helps facilitate trade within the country,” Simon explained.
He suggested to MMT that they apply for our Small Business Export Loan, to cover the unforeseen reduction in vessel traffic. They agreed, and Simon started the application on their behalf.
“The funding industry should be fully aware of Export Finance Australia. As a finance broker, my role is really to provide a suite of products that are going to be appropriate for each instance, so I need to understand what kind of options are out there – not just the big four banks and other financial institutions. If I'm looking at trade finance transactions, there are other options of which Export Finance Australia is one.”
“Export Finance Australia’s application process was quite seamless and intuitive,” said Simon. “My contact there provided a lot of support and kept me updated on the progress of the application.”
Smooth sailing ahead
MMT’s Small Business Export Loan application for $250K was successful and supported them during the period of disruption to alumina and iron ore vessels in Bunbury and Esperance.
With the Bunbury and Esperance operations now running smoothly, it looks like full steam ahead for the harbour towage business. Simon said: “Export Finance Australia took a strong commercial view of MMT’s situation, which was really refreshing.”
MMT were impressed by the way the transaction was handled, stating that the communication throughout the process was exceptional, and they really appreciated the efforts to get things done during the Christmas and new year period.