The Old Van – Line of Credits II

Stepping into his office, reaching to his room door way, his secretary’s voice from his table intercom, requesting him to answer the incoming call, John walked nearer to his table, picking up the receiver before taking his seat. Listening to the caller and getting to know, it was the honorable renovation contractor. John smiled and without saying a word and just only listening, he get himself be seated, adjusting his most comfortable sitting position and sill listening.

Henry the contractor, he was Sam’s friend, it was hearsay, he was one of the best friends. Sam promised him cash before jobs commissioned and cash payment before the next phase of jobs to get started. John was so told over the telephone from the Contractor.  Henry knew it was not the norm of practice so far the renovation/construction industry was concerned. On the other hand, it was a mutual agreement between Sam and him. The price of renovation was way below market price. There were quotation of at least one million RM or above as per he said. Seven hundreds thousands RM  was a deal to exchange for easy payments terms, after all, he said that he used those materials,  the quality if not better it was at par with other competitors.

John “Mr. Henry please, can you hold on for a while and let me say something about the payments we owed it to you?” The caller “Sorry, Mr. John I have to tell you the whole story so that you do understand my position. I am worry, you will be like Sam, lately he refused to take my call, I am far away from your head office and I won’t be able to see him in person now and then” John “Don’t worry, I promise I will take your call, every one of your call” Caller “Sure?” John had to ensure him “Sure, definitely sure, give me one or two hours today and I will call you back” Caller was a bit hesitated “You will call me? Or I call you one hour later” John “Ok; call me back if I fail to call you before lunch”

John had a brief and quick verification of the bank loan application and the documents of the renovation contract. A contract of total value, seven hundred thousand RM, documents indicated five hundred thousand RM of value in jobs completed but only paid two hundred thousand RM. John delay no further, he arranged the office dispatch boy to send over the completed jobs report, the billing of jobs completed and its receipts, the total of two hundred thousand RM.

Danny secretary called up “John I had received your documents and Danny had signed it and I am waiting for another signature” John “When can you get the other signatory?”  Secretary “Most likely next week, anyway today is already Friday and I can’t get it signed today, authorized signatory not around except Danny” John asked “Is Bob in charge of our accounts over the new company?”  The secretary “Yes and I understand your Mr. Sam wanted this account be operated under the central region branch bank and most likely another bank account will be opened in the northern state where the factory situated” John had no comments and The Secretary spoke again “Oh yes John, I nearly forget, please send the director resolutions of approvals for the loan application together with other documents”John on the line with Henry “Mr. Henry, it is next week, we will have fund from the bank loan next week” Henry sounded a little disappointed “Next week? Can it be Monday or Tuesday?” John “Sorry, Mr. Henry, I dare not make an empty promise, I believe, before end of next week should be no problems” Henry “Is it possible to clear the outstanding of RM300.000 plus another RM100,000.” John “Yes, this is another issue I have o discuss with you” Henry listening and John continued “I have to be frank with you since you are good friend of Sam”

John explained the situation to him, he believed, he needed to disclose some facts of the new company otherwise he would have problems with the guy.  John “Mr. Henry as you know this is a new company, we have exhausted all funds and we are getting bank loans to release payment to you.  The bank needed us to provide them your invoice and the receipt you issued to us to the bank. The amount of the receipt, it is the amount of loan they release to us” Henry asked “You mean you could only pay me RM200,000/=” John “Yes, but then, the moment you receive the payment, please do issue the receipt sooner possible and send to me direct and I will arrange another payment” John was not intend to agitated him and silent on the part that he could not receive payment before the jobs was done.  The bank would certainly not to approve the loan. There was a RM200,000/= free for manipulation but reserve for other expenditure to meet.

The package of the total line of credits facility, it was twenty millions RM.  Term loan for renovation or improvement of the factory and the machineries, there were RM700,000/= plus RM1,000,000/= respectively.  Rm300,000/= for working capital which was in the form of Overdraft facility (OD) and RM18,000,000/= for ECR, LC, bill purchases and others.

ECR, the export re-finance facility which was having very low interests and the fund, it was not from private bank finances, it was a subsidized finance from the country central bank.  It was to assist the exporting industries and stimulating the growth of the country economy by exporting force/demands.

It was a first container to roll out from the new factory.  It was so arranged that all higher management personals were present to witness the loading of container to the truck and send to the port for sail.

Next Topic: The Old Van – Line of Credits III

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