RECENTLY FUNDED | $2.5MM Asset-Based Line of Credit | Industrial Consulting Firm | CT
LOAN CASE STUDY: Learn how a timely new line of credit buys time for a consulting firm to restructure its business mix by refinancing existing debt with the help of Speritas Capital Partners.
THE SITUATION: A 30 year old northeast-based industrial consulting firm was pivoting its business mix in response to weakness in their legacy business.
Weak performance had caused stress in the company’s bank relationships which had begun limiting availability under an asset-based line of credit.
The company had a $1MM mortgage with a regional bank secured by their owner-user property, and this needed to be restructured and paid off at a discount as part of the overall restructuring.
The company also had a $1MM asset-based line of credit from a private lender. Due to recent weakness, this lender had excluded inventory from the eligible collateral pool entirely. The credit line needed to be refinanced with a new lender who would allow inventory in the eligible borrowing base.
Speritas Capital was brought in to identify a lender who would understand the turnaround story, the value of the existing collateral, and who was willing to pay off the existing bank mortgage at a discount.
This situation was right in Speritas Capital’s wheelhouse.
Asset-Based Loan Financing Challenges
New Lender could not be a Bank
The new lender had to be a nonbank lender who was comfortable paying off the existing mortgage at a discount. Banks will generally not pay off another bank at a discount.Client was in Turnaround
Any new lender had to be comfortable entering into a new relationship with a borrower in the early stages of a turnaround.Avoiding Intercreditor Agreements
The best case would be to bring in one lender to take out the two existing lenders. Using one lender would avoid the need for an intercreditor agreement and prolonged negotiations. This is where we focused.Had to find an Asset Based Lender who would lend against Real Estate
The problem was that many asset-based lenders will only lend against accounts receivable, inventory and machinery and equipment. Lenders usually have limited appetite for commercial real estate as collateral.
Asset-Based Lines of Credit are often underutilized as a strategic solution in times of financial stress.
Speritas Capital’s Role - Funding Solutions
Working closely with the company’s turnaround management consultant, Speritas Capital began to analyze the historical financial statements and near-term projections.
At the same time, Speritas Capital created a short list of potential lenders.
Luckily, one of our relationships was with a creative alternative ABL lender who was able to consider accounts receivables, inventory, equipment and commercial real estate in the collateral pool.
Designing the right structure was critical. The refinancing was structured in 2 parts:
A revolving line of credit using the accounts receivable, inventory and real estate; and
A term loan secured by the real estate. This structure gave the client a prudent mix of term debt and revolving credit.
Identifying and matching the right lender to challenging financing situations is what Speritas Capital Partners does best. Having deep lender relationships means we can come up with possible solutions quickly.
Questions about asset-based lending or complicated structures? Call or text 203-247-4358, send an email or schedule a call now with Speritas Capital CEO, Jeff Bardos.
About this Asset-Based Line of Credit Financing
There were three parts to this transaction:
Refinancing of the accounts receivable and inventory line of credit
Cash out refinancing secured by an owner-occupied, light industrial property
Repayment of a commercial mortgage at a discount
Loan Details:
Loan Type: Asset-Based Line of Credit
Lender: Private ABL
Loan Amount: $2.5MM
Terms: 3 Years
Closed in 60 days
“The role of Speritas Capital is simple. We identify the very best lender for the situation, at the best rate – and get the loan funded.”
Conclusion – Post Finance Update
With the closing of this $2.5MM ABL line / term loan, the company now has a single lender excited about supporting the company’s growth.
The new financing structure provides the needed liquidity for growth.
Are you looking for a strategic partner to advise you on your next asset-based financing challenge?
The Speritas Capital team is always happy to hear your story, learn more about your financing needs and answer your questions. We bring our 30+ years of banking experience and our transparent, strategic approach to every client and every deal, both large and small.
And we never take up front fees.
CONTACT INFO
Jeffrey Bardos
CEO Speritas Capital Partners
Call/text Jeff at 203-247-4358
Email Jeff with your ABL financing questions
Schedule a call with Jeff using our online scheduling tool.
More about Jeff
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