Background:
An important supermarket chain– the UK’s largest – asked us to assist with a arranging “off-balance sheet” finance which was simple, ensured that the supply chain was paid promptly and that its 250,000 employee PC scheme was a success.

The Requirement:
Our service partner, a well established employee PC scheme manager, won a tender to deliver a scheme to this customer, across its UK-wide 250,000 employee base.  The customer set down a number of strict requirements:

• frequent payments for the supply chain throughout the supply window

• a single lease contract and a single sign-off by the Board of Directors

• rental payments to shadow the salary sacrifice profile

• leavers (the business had a significant churn of staff) to be managed in terms of redemptions

The Solution:
We negotiated a lease facility with the customer under which:

• a single contract was signed at the commencement of the project funding

• during the 5 months supply, supplier invoices were settled by our bankers

• throughout the life of the contract, we assisted the customer with a monthly reconciliation of scheme leavers, disposals and reduced lease rental

The Benefits for the Employee PC Scheme Manager:

• Our partner was able to offer a large scheme with the benefit of a complete finance package

• AFM handled the negotiations for documentary terms and agreed with the customer’s European Treasury department a transaction funded at a margin over sterling swaps

• AFM also ensured transfer of ownership in the PCs to the employees at the expiry of the hire arrangement

The Benefits for the Customer:
The scheme was a success and AFM assisted in this:

• The finance was “de-recognised” on the basis of no risk or reward in the structure, enabling an “off balance sheet” treatment

• AFM managed leavers on a 4-weekly basis

• AFM ensured clean passage of title to employees at the end of the lease