Meridian Logistics Ltd, the md's chair: What do you do with the structure?

// DRILLS / ISSUE 05 / MERIDIAN · MD

ISSUE 05 · 2026-09-05 · 5 MIN READ

// ONE FILE, THREE CHAIRS

// THE LENDING CHAIR · ISSUE 05

Meridian Logistics

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// THE MD'S CHAIR

The Ninety Days

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// THE CUSTOMER'S CHAIR

Everyone Signs It

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The Ninety Days

MERIDIAN, FROM THE MD'S CHAIR

LOGISTICS · THE MD'S CHAIR · DIFFICULTY 3/5

// THE SETUP

You are the second generation at Meridian, US$52m of linehaul and warehousing and a nine-year file the bank calls disciplined. Two years ago the national grocery chain was 31% of your revenue. Then you won the renewed national distribution contract, and the chain is now 58% and climbing as the volumes step up. You asked the bank for US$6.0m of term debt: eighteen linehaul units and the fit-out of a distribution centre dedicated to the chain's network. Five-year contract, volume commitments, and a 90-day termination for convenience clause that procurement declined to negotiate. Everyone signs it.

The term sheet came back this morning, and it is not the US$6.0m you asked for in the shape you asked for it. The trucks are funded in full over five years, standard security. The dedicated fit-out is funded conservatively and amortised inside thirty-six months, so that the loan's exposed tail never outlives what the notice period could practically do to you. Quarterly reporting on contract margin, not just revenue. And a sentence the relationship manager read out rather than paraphrased: the bank is underwriting Meridian's indispensability to the chain, the cost of replacing you, rather than the paper.

The renewal gave up 90 basis points of margin, procurement doing its job. The fleet averages 6.8 years. The contract starts next quarter and the chain's service levels require the full capacity from day one.

The bank has told you which of your assets are yours and which belong to the customer. What do you do with the structure?

// FY25 SNAPSHOT

SOURCE: THE BANK'S TERM SHEET · FY25 · COMPOSITE CASE — FICTIONAL

REVENUE

US$52m

▲ +21% (2yr)

TOP CUSTOMER

58%

▲ from 31%

CONTRACT

5 years

90-day break clause

EBITDA MARGIN

8.2%

▼ −90 bps on renewal

FLEET AGE

6.8 years

▲ replacement deferred

Dedicated-contract capex is conventionally amortised inside the contract term. The bank amortised yours inside the notice period instead. The difference is the file's real subject.

// YOUR JUDGMENT

What do you do with the structure?

[A]Go back to the chain for a 180-day notice period before you sign the bank's terms — the clause is the whole problem[B]Take the structure, and spend the thirty-six months making the fit-out less dedicated: a second customer in the DC, generic racking, the margin line to yourself monthly[C]Shop the loan — another bank will fund the full US$6m against an investment-grade five-year contract[D]Shrink the capex: buy fewer units, lease the DC fit-out, and grow into the contract instead of ahead of it

This drill needs JavaScript: the options above cannot be selected without it, and the senior banker's reading stays hidden. Turn JavaScript on and reload the page to take the drill.

// THE READING

Read the two amortisation schedules as a map, because that is what they are. The trucks get five years because a tractor unit hauls for someone else the day the notice letter arrives. The fit-out gets thirty-six months because racking configured to one customer's network is worth close to scrap the same day. The bank has sorted your capex into what is yours and what is, in practice, the customer's, and it has lent to the first category on your terms and to the second on the customer's. That is not caution. It is a description of your business that you had not written down.

Why not A: you will not move the clause. Procurement declined it once, with the contract unsigned and the volumes still in play; it will not concede it now, with the contract signed and the bank's letter as your only argument. Asking again costs you the one thing the renewal left you, the appearance that you signed it with open eyes. The clause is the chain's. What you can move is how much of your business it can take with it.

Why not C or D: C shops a loan that another bank will write against an investment-grade contract, on the paper, at US$6.0m over five years; it will not have read the asymmetry, and you will have financed an existential bet with a lender that does not know it is one. D shrinks the capex below the service levels the contract requires, which makes the first breach yours rather than the chain's and hands procurement the notice it would otherwise have had to justify.

Which is why the senior banker's advice, in the MD's chair, is B. Take the structure, then spend the thirty-six months making the fit-out less dedicated: a second customer in the distribution centre, even a small one; generic racking wherever the chain's specification allows it; and the contract margin line to yourself every month, before the bank sees it every quarter, because margin is where a concentrated customer's power shows first. The bank has told you the only asset that protects you is how hard you are to replace. That is a thing you can build. The fit-out schedule is the deadline.

The bank has just told you which of your assets belong to the customer. Spend the next three years taking them back.

// THE SAME FILE, FROM THE OTHER CHAIRS

Three people read this file in the same week. The lender's reading is the one the other two are reacting to.

// THE LENDING CHAIR · ISSUE 05

Meridian Logistics

One customer is now 58% of revenue — and the expansion request is for assets dedicated to that customer. The contract has a 90-day break clause.

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// THE CUSTOMER'S CHAIR

Everyone Signs It

Your logistics supplier is borrowing US$6m to serve you, and its bank keeps asking about your ninety-day clause. Everyone signs it. Should you keep it?

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// HOW READERS ANSWER

The senior banker's read is [B].

[A] · 40%

[B] · 27%

[C] · 21%

[D] · 12%

The tempting answer is A. The senior banker chose B. The reading explains what the bank's two amortisation schedules tell you about your own assets, and why the margin line is the first place the customer's power will show.

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