Kajavala Forestry Limited
Case Study

At GE Capital, we used our understanding of asset financing, and forestry industry business cycles to help Kajavala Forestry.

GE Capital wanted to know what they could do to support me. We had really constructive conversations and I ran a few ideas past them. They’re pretty good at this sort of thing and we came up with a plan that we thought would work.

Background

Bay of Plenty forestry company Kajavala Forestry Limited was started in 1970 by the Kajavala family. For years the company’s focus predominantly sat with log harvesting. However as current Managing Director Jacob Kajavala became more involved in the business, the company shifted to look towards providing product analysis in processing yards. Jacob combined his knowledge of IT with his father’s passion for the forestry business to create a prototype computer programme to optimise the analytical process to determine the value of logs in the yards. This technology innovation, combined with their other business attributes, allowed KFL to pick up a large service contract with a NZ forestry business and the KFL team grew from 25 staff to 170 in a space of a few years. At that stage KFL were one of the largest forestry contractors in New Zealand.

Challenge

In 2003, the forestry business they had the contract with collapsed, taking with it the majority of KFL’s market. In fact, they lost 68% of their revenue overnight. KFL had equipment that was heavily financed and very quickly they were struggling to meet repayments. “At that point, when things started to go bad and I couldn’t service all my obligations, was when the differences between financiers became apparent,” says Jacob Kajavala, Managing Director. “My bank became very hard to deal with, setting unrealistic demands that I just could not deliver on.”

Solution

At GE Capital, we work closely with our customers to understand not only their business but the industry they operate in. "GE Capital wanted to know what they could do to support me. We had really constructive conversations and I ran a few ideas past them. They’re pretty good at this sort of thing and we came up with a plan that we thought would work".

Business at a glance

50
employees
5%
process 5% of all forestry output
40
years in business
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