Recently Funded | $8MM Equipment Finance Deal
RECENTLY FUNDED – $8MM EQUIPMENT FINANCE FOR MANUFACTURER
Vinyl flooring manufacturer launches new product line with equipment financing arranged through Speritas Capital Partners.
A 100 year-old flooring company wanted to launch a new product line based on a proprietary printing technology. The company had already obtained patents for the new process and were well positioned to disrupt the flooring industry – all they needed was to finance a new, $11MM production line to produce the new flooring product.
The company had recently reorganized and had a major bank line of credit allowing them to borrow against receivables, equipment and inventory. However, the company didn’t have enough available borrowing capacity and their bank was unwilling to increase the line.
The bank was willing to ‘carve out’ the needed equipment and allow a leasing company to provide a lease backed by the new equipment. Unfortunately, the CFO had little success finding a leasing company that would offer a high loan to value with reasonable monthly payments.
The challenge was to find a lender who would be comfortable taking only the new production line as collateral.
A member of the board referred the CFO to Speritas Capital Partners.
About the Loan
- Loan Type: Equipment Leasing / Equipment finance
- Lender: Private non traditional equipment finance company
- Loan Amount: $8MM | 70% LTV
- Term: Three year lease, extendable to 4 (after note maturity / liquidity event)
- Leased: 11 pieces of equipment ranging in cost from $10K to $4MM
LOAN TYPE: EQUIPMENT LEASE
PRIVATE NON-TRADITIONAL LENDER
LEASED: 11 PIECES OF EQUIPMENT
- Earnings levels weak but turning around, thin margins
- New, unproven product
- Existing payment requirements to current lenders
- Debt covenants restricting payments to existing note holders
- Existing line of credit was insufficient
The CFO began working directly with Jeff Bardos, Speritas CEO, to find a solution. Jeff’s background in banking and transaction structuring helped him show all the parties involved – the noteholders, the bank, the leasing company and the borrower – that their interests were aligned.
Jeff was able to work with the client and the leasing company to structure a lease that was the best, and most profitable, way forward for everyone involved. The structure included periodic reimbursement payments as the individual pieces of the line were delivered.
These payments were critical to the company’s ability to manage cash flow and meet the covenants in their bank and debt agreements.
Jeff reviewed the financials, projections, management team, and the new product IP. With a full understanding of the challenges involved, Jeff identified equipment finance companies within the Speritas Capital lender network that would be interested in this deal size and type of risk. As an integral member of the structuring team, Jeff ushered the deal from introduction to close.
Conclusion – Post Finance Update
This was the story of a company several years into a turnaround with very thin margins, limited cash flow, existing debt, and a desire to expand through the production of an innovative new product. They tried, but could not obtain financing.
Our client recently commented that “we would not have been able to get there without your help.” To me, this summarizes what Speritas Capital is all about – helping clients expand their financing options and attain outcomes they would not be able to achieve on their own.
With the help of Speritas Capital the borrower ended up with affordable monthly payments that work within their existing debt and lender restrictions.
The company is in the early stages of production on the new line and is strategically positioned to grow, increase earnings, impact the future of flooring, and regain market share.
The client writes...
“We are certain we could not have done this without Speritas Capital’s help.”
Do you need a strategic partner to help you with your next EQUIPMENT FINANCE challenge?
Speritas Capital Partners can help you finance new or used equipment through capital or operating leases. Our years of industry experience translates into flexible financing structures and quick responses.
The Speritas Capital team is always happy to hear your story, learn more about your financing needs and answer your questions. And we never take an up front fee. Contact Speritas Capital Partners today!
Jeff Bardos, CEO – MEET JEFF!
The Speritas team brings our 30+ years of banking experience and our transparent, strategic approach to every client and every deal, both large and small.