Many of our clients’ proposals take a long time to come to fruition, but we take great pride in standing by them and guiding them throughout their journey. In this case, Rob guided the Piper family from Cranbrook, Kent for three years during their complicated transaction to buy an anaerobic digestion (AD) plant that an energy company had installed on their land in 2016.
Richard, Andrew and Mark Piper were recommended to talk to Rob Lister of R&BS by their land agent in early 2019, after their initial request to their existing bank for a mortgage to buy the AD plant was declined. But, Rob was able to overturn the bank’s decision by submitting more facts and details on the performance of the AD plant.
The purchase was complex and took a considerable time to negotiate. As a result, Rob had to submit a new lending proposal to several banks in early 2021. The Piper’s bank manager had changed, which presented an opportunity to review their new mortgage, a current mortgage and the overdraft facility, and to test the market with other banks to see what rates, terms and conditions were available. The outcome was a deal with great terms from their existing bank.
Mark Piper said:
“Rob’s help gaining the correct funding for this project was invaluable. As farmers we are good at coming up with ideas and projects to enhance our business, but sometimes we don’t talk to the right people about funding.
Rob opened doors which we didn’t know existed, and his enthusiasm for the project gave us enormous confidence in not only him but also the funders we eventually went with. As a family we are very grateful to Rob and his team and will be using him again with all our future financial needs."
The farming and AD operation
Conghurst Farm has been in the Piper family for multiple generations. Richard Piper has farmed it since he was 18 years old and he now manages it in partnership with his sons Andrew and Mark.
The farm operates a 4-year arable rotation of winter wheat, a bean, pea or OSR break crop, winter wheat and followed by another break crop such as oats, triticale, rye grass or fodder beet which is used as feedstock for the AD plant. Maize is also grown for the AD plant feedstock. The Pipers also run 200 store lambs on a flying flock basis, grazing over winter and a few beef cattle and stores.
Octopus Investments built the AD plant and owned it, but the land under the plant is owned by Richard Piper. The Pipers previously had a contract with the company to run, maintain and supply the AD plant, which they had done very successfully for 3.5 years, taking supply and management fees. They were given the opportunity to buy the plant.
The plant is an integral part of the farming operation. It takes 10,000 tonnes of organic material per year, with all feedstock (silage, slurry, manure, straw, waste apples and grape waste) sourced from their own land or land rented and in their control. All digestate from the plant is put back onto the land, making better fertility for future crops and saving on fertilizer costs.
A team of consultants
Considerable analysis went into assessing the viability of the plant purchase. In addition to Rob, the Pipers have a strong team of specialist professional advisors – which also helps give banks and lenders confidence to lend. This includes Iain Morris of Chavereys Accountants; Matthew Berryman of Complete Land Management; Jonathan Midgeley, Partner at Gaby Hardwicke Solicitors; and land agency and planning advice from BTF Partnership and Lambert & Foster.
The Pipers had been very loyal to their bank and had great relationships with previous bank managers. However, due to a recent change in bank manager and a tightening of bank appetites, the family wished to review their complete banking arrangements. They were looking for a substantial mortgage to include the purchase of the AD plant, a restructure of a current mortgage and provision of a working overdraft facility. They also needed flexibility in the mortgage product to include part interest-only and part capital and interest.
Importantly, they needed a banking relationship with someone that understood them, the business including the AD plant performance, and their business aspirations, both now and in the future.
It was essential they got the best terms, rates and covenants, and so were prepared to offer security accordingly. With 400 acres of arable land, 100 acres of woodland, farm buildings, the AD site, the main farmhouse, three cottages, three holiday lets and a derelict site with planning permission for a dwelling, double cover (below 50% LTV) could be offered as bank security.
The process and result
To demonstrate the strong track record of the family, their farming operation and the AD plant, Rob prepared detailed reports and documents. These were supported by the farm accounts, rental agreements, contract arrangements, cash flows, a 20-year budget for the plant and realistic assumptions. Anticipating any queries from the banks, Rob also highlighted and clearly explained any deviations from budgeted performance. He also demonstrated how the loan would be serviced, including a sensitivity analysis that met the bank criteria.
Rob asked several banks for confirmation of their appetite and indicative offers of rates, terms, fees and covenants. Rob set up site visits with the family and two bank managers who offered the best rates and showed greatest appetite. A visit was important so that any bank managers could meet the family, see their expertise first-hand and understand their management and enthusiasm. Rob helped the Pipers analyze and negotiate the offers, and helped the Pipers get the best deal, terms and relationship offered – which, in the end, was their existing bank.