Small Business Debt Restructuring Mackay

Reorganising a Mining and Transport Service Business Debt

Case Study: Strategic Debt Restructure for a Mining Services and Transport Business

Background

A mining services and transport company based in Mackay, Queensland, approached Mortar Finance seeking urgent funding support. The business required a total funding solution of $3.5 million, including:

• $2.4 million to clear an overdue Australian Taxation Office (ATO) position
• $200,000 in short-term working capital
• $870,000 in equipment finance to support the purchase of a new truck

While the business maintained a long-standing relationship with a mainstream bank and had appropriate funding facilities in place, access to these facilities had been suspended. This was due to covenant breaches, declining profitability, and the outstanding ATO position. As a result, neither the incumbent bank nor alternative lenders could support additional debt under traditional assessment criteria.

The Challenge

Over recent years, the business had undertaken significant capital investment in assets, people, and infrastructure. Combined with personal circumstances, this resulted in reduced margins and negative debt servicing coverage after tax.

Further complications included:

• A highly leveraged equipment portfolio
• Accelerated amortisation on several facilities
• Monthly equipment finance repayments exceeding $212,000
• A number of underutilised trucks and trailers are draining cashflow

Despite these challenges, Mortar Finance identified that the business had historically traded profitably and retained a strong pipeline of recurring and project-based work, which could return to historical margins if cashflow pressures were relieved.

Mortar Finance Strategy

Mortar Finance conducted a comprehensive financial assessment, reviewing profit and loss statements, balance sheets, debtors and creditors ledgers, and the full asset register. This was supported by a detailed review of all existing funding facilities, including trade finance, invoice finance, chattel mortgages, and asset leases.

Key findings included:

• Total tangible plant and equipment valued at $13 million
• Existing equipment funding of approximately $7 million, geared at 61%
• Seven assets were identified as underutilised and surplus to revenue requirements
• Long-term cashflow is supportable through existing trade and invoice finance, with no increase required

The primary issue was short-term liquidity and excessive loan commitments, rather than a fundamentally unviable business.

Execution

Mortar Finance facilitated strategic discussions between the business owners, the finance manager, and the external accountant to align on a clear execution plan.

The strategy was implemented in two key stages:

1. Asset Sales
   Seven underutilised trucks and trailers were identified and sold at auction. These sales achieved a total value of $1.76 million, generating $835,990 in net capital after existing finance was paid out — without impacting projected revenue.
2. Equipment Finance Restructure
   Mortar Finance then identified 16 equipment finance facilities that could be restructured to release equity and reduce monthly repayments. While this resulted in a higher interest cost, the extended loan terms significantly improved monthly cashflow and aligned with the business’s historical margins.

The combined asset sales and restructures generated $2.77 million in capital, sufficient to clear the ATO position and address the temporary working capital shortfall.

Banking Outcome

With liquidity restored and a clear operational roadmap established, Mortar Finance prepared a strategic funding submission to the business’s incumbent bank. The application addressed the company’s operational strategy over four financial years:

• FY23: Stable margins and profitability
• FY24: Revenue growth with margin compression due to investment
• FY25: Heavy investment phase impacting short-term profitability
• FY26 (Projected): Return on investment, margin recovery, and improved cashflow

The submission demonstrated that, once the asset sales and restructures were implemented, annual loan commitments would reduce by approximately $320,000, enabling a return to profitability in FY26.

As a result:

• Full access to existing facilities was reinstated
• An additional $1.35 million was approved
• Funding was provided to purchase a new truck and support upcoming capital expenditure

Outcome

The Mortar Finance strategy delivered a decisive turnaround.

Capital Impact

• Asset sales (net): $835,990
• Equity released via restructure: $1,786,487
• Total capital generated: $2,622,477

This cleared the ATO position in full, provided working capital, and left the business in a neutral cash position.

Business Cashflow Impact in Mackay

• Monthly equipment repayments reduced from $212,449 to $172,047
• After including the new truck repayment, net monthly cashflow improved by $26,855, equating to a material annual improvement

Conclusion

Through a disciplined and strategic approach, Mortar Finance transformed a distressed funding position into a sustainable long-term solution. By unlocking equity from underutilised assets, restructuring existing facilities, and aligning finance with operational realities, the business was returned to profitability, supported by contracted recurring and project works.

This case study demonstrates Mortar Finance’s ability to deliver complex restructuring solutions where traditional lenders cannot, enabling small businesses to stabilise, reset, and grow.