Producer of machined and fabricated components and parts for original equipment manufacturers in the agriculture, construction, mining, and oil & gas industries.
The Financing Situation:
The Company was seeking additional working capital to create availability on its line of credit and fund growth initiatives. The Company’s asset based lender, North Mill Capital (“North Mill”), which is not affiliated with Super G, was providing a flexible, asset based credit facility with favorable advance rates on accounts receivable & inventory. Given the cyclical nature of the industry, the Company was seeking additional cushion on its credit facility.
Under similar situations, our typical deal structure is to provide a second lien loan and enter into an intercreditor agreement with the senior lender(s). However, since there were multiple senior secured equipment lenders in this situation, negotiating and entering into intercreditor agreements with all would be cumbersome and delay the closing timeline. Super G and North Mill determined the most efficient process to close the loan was a junior participation agreement in which Super G participated in North Mill’s credit facility as a “last-out” participant. This allowed the Company to obtain an additional $2.0 million of capital in less than three weeks via North Mill’s asset based facility.
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