The challenge: The University of Wollongong was keen to buy an x-ray imaging camera from Christchurch’s MARS Bioimaging. But the university’s requested payment terms spanned almost two years, to agree to the sale. MARS in conjunction with their working capital financing partner Pacific Invoice Finance (PIF) and New Zealand Export Credit (NZEC) worked up a structure to address this need.
The solution: NZEC offered MARS its Export Credit Guarantee insurance policy on the buyer and assigned it to PIF. In effect, the insurance meant that if the project fell over at any stage across the two-year payment term, NZEC would pay PIF the outstanding payments.
The benefit: The sale enabled MARS’ entry into the Australian market and showed that this young company was willing to find solutions to secure every possible sale to support its strategy to move from its roots as a university technology spin-off to an innovative New Zealand exporter.
Christchurch’s MARS Bioimaging had an order from an Australian university for one of its 3D x-ray imaging cameras - but there was a catch, and it was a potential deal-breaker.
The buyer was the University of Wollongong but due to the fact the purchase would be funded through committed medical research grants, it would have to be paid off over 22 months as each of three buckets of research funding came through.
MARS marries University of Canterbury and University of Otago technology with new generation Medipix chips in machines that create quantitative 3D colour imaging at very high resolutions. In 2021, when Wollongong placed its order, MARS was an early stage research spin-off company with big dreams but modest cashflow.
MARS Chief Financial Officer Rob Campbell says it was a sale MARS didn’t want to walk away from as it would create a beachhead into the Australian and international markets, but the financial logistics seemed unworkable.
“The University of Wollongong could only pay the machine off over two years, which didn’t align with funding available to MARS. How could MARS accommodate the universities funding terms to secure the sale?”
Pacific Invoice Finance’s Managing Director Michael Bushell suggested putting in a call to NZEC. “We knew NZEC had various products to support Kiwi exporters, and this seemed like the kind of problem they could help us solve,” Michael says.
NZEC Senior Business Originator, Phil Quinn, offered MARS an Export Credit Guarantee insurance policy on the University of Wollongong. This was then assigned to PIF thus allowing them to fund the longer payment terms required by the University of Wollongong.
“We could see why the exceptionally long payment terms would be challenging for MARS and Pacific Invoice Finance,” Phil says. “But our due diligence gave us reassurance that the risk was within our range of comfort, and we could see huge potential for MARS in Australia and beyond.”
NZEC’s Export Credit Guarantee provided MARS and PIF with an assurance that if the university did not pay NZEC would. This provided PIF the additional comfort to enable them to support the necessary funding for MARS.
The camera was installed and commissioned on July 1, 2022, and is being used to great effect by the University of Wollongong. Each of the first two payments have been received in full and on time. The third payment is due in April 2024, so everything is going to plan.
“Everyone has kept their side of the bargain,” Rob says. He says MARS will be very keen to access NZEC’s suite of services again if the opportunity arises. “If needed, we wouldn’t hesitate to work with NZEC again. It’s been relatively easy, to understand and access their products.
“These Government supported tools are there to be used. We’ve got a great product in NZ Inc.”
Rob says MARS is grateful to have been able to find support to work within the unique terms of the Wollongong deal. “This deal got us into Australia and opened a lot of channels for us. It’s given the business community additional confidence in us. People can see we are going to go the distance.