Recently Funded - $8MM Equipment Financing

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.

A member of the board referred the CFO to Speritas Capital Partners.

Speritas Capital Partners helped an East Coast flooring manufacturer disrupt the vinyl flooring industry by arranging financing for a new high tech  product line.

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 AMOUNT:
$8MM

LOAN TYPE: EQUIPMENT LEASE

LOAN TERM:
3 YEARS

LTV:
70%

PRIVATE NON-TRADITIONAL LENDER

LEASED: 11 PIECES OF EQUIPMENT

FINANCING OBSTACLES

  1. Earnings levels weak but turning around, thin margins
  2. New, unproven product
  3. Existing payment requirements to current lenders
  4. Debt covenants restricting payments to existing note holders
  5. 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. He was able to work with the client and the lessor to structure a lease that was the best, and most profitable, way forward for everyone involved.

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 still in a turnaround stage 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.

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...


IS EQUIPMENT FINANCING RIGHT FOR YOUR BUSINESS?

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
Cathy Blood, Partner and Director of Marketing

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.