The Solution: New Zealand Export Credit’s Loan Guarantee gave Connexionz’s bank the security and confidence to provide an overdraft facility.
The Benefit: Connexionz could pursue their international project, knowing cashflow would not be an issue.
A focus on innovation has seen Canterbury business Connexionz grow at pace in recent years. From humble beginnings supplying technology to run Christchurch’s bus network, the company now provides Intelligent Transportation Systems to some of the world’s busiest transport networks.
But when Connexionz had an exciting opportunity to deliver its Intelligent Transportation System across a large California bus network, its directors were worried about cashflow.
Connexionz had won the tender with the County of Stanislaus, rural Northern California, in 2019. The $US1.8m contract spanned a year-long delivery, with substantial up-front costs and the potential for milestone payments to be delayed. With a number of other projects underway, Connexionz might have needed to dig into its reserves.
CEO Wayne Smith realised he needed to secure an overdraft to cover any unexpected events..
“We had a number of projects live at this time,” Smith says, “but we really wanted to take advantage of this opportunity in Northern California too.”
“We could deliver the contract using our own cash reserves, but often with projects of this size parameters change or, for reasons outside of our control, progress is delayed. We just had too many exciting projects on the boil to take the risk of being low on cash. I wanted to secure an overdraft as a buffer.”
Because the project was based overseas, obtaining traditional bank security was not an option. Connexionz then approached the Treasury’s New Zealand Export Credit (NZEC) for support.
“We could see that this contract was good for Connexionz, who have been undertaking some great projects in recent years. We wanted to find a way of providing a facility that satisfied both the bank and Connexionz, and NZEC’s loan guarantee was the answer,” says Westpac NZ Commercial Manager Nadine Birkby.
Connexionz was already familiar with NZEC as it had utilised another of its products, a surety bond guarantee, a couple of years earlier. “NZEC had a look at our books and then provided its Loan Guarantee,” Smith says. “With the guarantee in place, our bank was happy to offer the overdraft. As it turned out, we made good use of that overdraft – it ensured we had more than enough to cover all eventualities.”
“We were always confident in Connexionz’s ability to perform this contract for Stanislaus County and the quality of the project and financial information received from Connexionz backed this up” explains Phil Quinn, NZEC Senior Business Originator.
The products Connexionz has installed in Stanislaus and other parts of the United States bring new levels of sophistication to the commuter journey.
Buses and ferries can be fitted with next-stop announcements, screens playing multi-media content linked to locations en route, moving maps, outdoor speakers to help visually-impaired people identify their bus or ferry as it approaches, digital passenger counters that take note of each person’s size and approximate age for demographic analysis and automatic destination sign alterations.
They even provide dispatch office oversight of each bus or ferry’s functioning so issues such as low brake fluid and overheating engines can be identified early, avoiding breakdowns and expensive repairs.
Connexionz also develops digital bus stop signage, interactive information and ticketing kiosks, and what is considered by clients to be the world’s most reliant AI system to predict bus or ferry arrivals. Connexionz’ systems run New York’s NYC Ferry, the Alcatraz Cruises fleet, and 18 other transport networks across the US.
The County of Stanislaus project kicked off in July 2019 and was finished in March 2020, a month ahead of schedule.
“New Zealand Export Credit’s backing gave us peace of mind,” Smith says, “and enabled us to be bold and ambitious in what we could achieve.”