Second Lien

The Company:
Publicly held (OTC) provider of telecom & engineering services and solutions.
Financial Profile (Consolidated): Revenue: $32mm | EBITDA: $2.7mm

The Financing Situation:
The Company was seeking subordinated debt to help finance the acquisition of a telecom staffing company that would expand its geographic footprint and service offerings. Given the consolidated EBITDA profile (<$5mm) of the business, traditional mezzanine debt was not an option and the Company preferred a non-dilutive subordinated debt option that could close quickly.

The Solution:
Super G was able to quickly get comfortable with the acquisition synergies, the Company’s management team, and favorable industry momentum to approve a $1.15mm subordinated term loan that would fill the purchase price funding gap. Super G worked in partnership with Prestige Capital Corporation, who provided AR financing, to close the accretive acquisition.

For more information on Prestige Capital Corporation, please contact:
Stuart J. Rosenthal
Executive Vice President
SRosenthal@prestigecapital.com
201-944-4455
www.prestigecapital.com

The Company:
Privately owned manufacturer of premium artisanal Greek yogurt, handmade from a proprietary family recipe.

Financial Profile: Revenue: $21MM | EBITDA: $2MM

The Financing Situation:

The Company had engaged a middle market investment bank to secure a large round of growth equity capital. During this process, the Company required additional working capital to help complete the opening of a new manufacturing facility that would increase production capacity and in turn boost revenue, leading to a much higher valuation.

The Solution:
Super G provided a 2nd lien, non-dilutive $2.1MM term loan behind the Company’s existing bank credit facility, which consisted of an accounts receivable-based line of credit and an equipment loan. Super G quickly closed its loan which enabled the Company to complete the transition to its new facility and created more time for the Company’s investment bank to run a complete process and secure the best deal possible. Super G worked in partnership with the Company’s bank to structure the transaction on terms acceptable to all parties.

The Company:
Family-office backed U.S. manufacturer and supplier of specialty textiles.

The Financing Situation:
The Company was in the process of refinancing its existing senior credit facility with a lower cost ABL facility. However, there was insufficient collateral availability to pay off the entire senior credit facility balance. The Company’s M&E was already levered so the shortfall could only be solved with additional equity and/or a cash flow based term loan, often referred to as a “Stretch Piece.”

“Stretch Piece” defined – the portion of a loan that exceeds the amount supported by the underlying collateral and is dependent on support from the company’s cash flow or enterprise value. The Stretch Piece solves “financing gaps” also known as “airballs.”

The Solution:
Super G specializes in providing stretch pieces in a second lien position behind ABLs and worked closely with the Company’s new senior lender, Lighthouse Financial Corp. (“Lighthouse”), to quickly close a comprehensive debt refinancing. Super G’s second lien stretch piece allowed the Company to close its lower cost, flexible ABL facility with Lighthouse, thus avoiding an additional equity contribution. As a result of this structure, the Company lowered its overall cost of capital significantly.

For more information on Lighthouse Financial Corp., please contact:
J. Brad Leach
President & CEO
bleach@lighthousefinancial.net
336-272-9766
www.lighthousefinancial.net

The Company:
Leading producer of perennials, annuals and tropical plants and one of the largest greenhouse operations in the United States.

The Financing Situation:
The Company needed additional working capital for its low season (fall – winter), when sales volumes are at their lowest and preparations for the spring high-volume period begin. The Company has an asset based lending facility in place for working capital, but AR & inventory levels often do not provide sufficient availability to cover production costs during the low season.

The Solution:
Super G was able to quickly get comfortable with the Company’s seasonality, inventory mix, and production risks which were mitigated by an experienced management team, strong historical financial performance, and collateral coverage. Super G worked in partnership with the Company’s senior lender, GemCap, to provide a second lien term loan with a payment schedule tailored to the Company’s seasonal cash flow – interest-only payments during the low season and amortizing payments during the busy season.

For more information on GemCap, please contact:
Richard Ellis
Co-President
rellis@gemcapsolutions.com
310-593-9073
www.gemcapsolutions.com

The Company:
Sponsor-backed provider of employee healthcare management services.
TTM Revenue: $35mm |  TTM EBITDA: $5.6mm

The Financing Situation:
The Company was seeking additional working capital for (i) seasonality around Q4 employee enrollment, (ii) cushion to continue growth and run an M&A process, and (iii) minimum liquidity to stay in compliance with bank covenants.  The Company’s senior lender is providing an asset-based revolving line of credit as well as a large enterprise value based term loan and could not extend additional credit.  Since the Company would like to pursue a liquidity event within 18 months, a non-dilutive solution was important to management as the business continues to grow and increase its enterprise value.

 The Solution:
Super G was able to work closely with the Company’s senior lender to provide a $2.0 million non-dilutive second lien term loan with a payment schedule tailored to the Company’s seasonal cash flow, growth initiatives, and bank covenants.  Super G was able to get comfortable with the seasonality of the business and total leverage given the Company’s strong financial performance, enterprise value, and experienced management team & private equity sponsor.

The Company:
Wine producer and distributor operating in a state of the art, custom winemaking facility.

The Financing Situation:
In the early stages of a capital raise, 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, Ares Commercial Finance (“Ares”), which is not affiliated with Super G, was providing a flexible asset based credit facility with favorable advance rates on accounts receivable & inventory and preferred the Company to fund any additional capital needs with junior capital.

The Solution:
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 Ares determined the most efficient process to close the loan was a junior participation agreement in which Super G participated in Ares’ credit facility as a “last-out” participant. This allowed the Company to obtain an additional $2 million of capital in less than three weeks via Ares’ senior working capital facility.

For more information on Ares Commercial Finance, please contact:

Matt Grimes, Managing Director
mgrimes@aresmgmt.com
(424) 285-2628
800 Corporate Pointe, Suite 300
Culver City, CA 90230
www.aresmgmt.com

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Glowpoint, Inc., a managed service provider of video collaboration and network applications, announced that on July 31, 2017, the company completed a recapitalization of its existing debt obligations with support from Western Alliance Bank and Super G. The new financing eliminated $9,362,000 of debt and accrued interest obligations and reduced the Company’s outstanding common stock by 385,517 shares. As of July 31, 2017, there were no remaining obligations related to the Main Street Term Loan or SRS Note. As of July 31, 2017, there were no remaining obligations related to the Main Street Term Loan or SRS Note.

The Company expects that the Debt Recapitalization resulted in an increase of approximately $8,700,000 to stockholders’ equity on the Company’s balance sheet as of July 31, 2017. Therefore, the Company expects to meet the continued listing standards of the NYSE American Company Guide relating to stockholders’ equity (as previously described in the Company’s Form 8-K filed on June 1, 2017), subject to the Company reporting two consecutive quarters of being in compliance with such standards. The following tables summarize the impact of the Debt Recapitalization on the Company’s debt obligations and outstanding common stock as of July 31, 2017:

“Completing this critical phase of debt restructuring provides the Company a foundation to re-align capital structure and market opportunity. Having materially eliminated outstanding debt obligations by over 80%, we now look forward to focusing on product development and expanding our market-leading support platform for video collaboration through the addition of cognitive services and advanced analytics,” said Glowpoint President and CEO Peter Holst.

“We are very pleased to have completed this Debt Recapitalization, which eliminated $9.36 million of debt obligations and resulted in a significant improvement to our working capital position as of July 31, 2017. The Debt Recapitalization resulted in significant accretion to shareholder value as it is expected to increase our stockholders’ equity balance by approximately $8.7 million and reduced our outstanding common stock by approximately 386,000 shares as of July 31, 2017,” said Glowpoint CFO David Clark.

Western Alliance Bank Business Financing Agreement

On July 31, 2017, the Company and its subsidiary entered into a senior secured Business Financing Agreement with Western Alliance Bank, as lender (the “Western Alliance Bank Loan Agreement“). The Western Alliance Bank Loan Agreement provides the Company with up to a total of $1,500,000 of revolving loans. On July 31, 2017, the Company received a loan in an amount equal to $1,100,000 under the Western Alliance Bank Loan Agreement, the proceeds of which were used to fund the Main Street Payoff.  See further description of the terms of the Western Alliance Bank Loan Agreement in the Company’s Form 8-K filed on August 1, 2017.

Super G Loan Agreement

On July 31, 2017, the Company and its subsidiary entered into a Business Loan and Security Agreement with Super G Capital, LLC (“Super G”), as lender (the “Super G Loan Agreement”) and received a term loan from Super G in an amount equal to $1,100,000, the proceeds of which were used to fund the Main Street Payoff. The Super G Loan is subordinate to the Western Alliance Bank borrowings. See further description of the terms of the Super G Loan Agreement in the Company’s Form 8-K filed on August 1, 2017.

The Company:
Designs, manufactures, and supports NextGen compliant avionics systems that improve the safety, efficiency, and affordability of flying.

The Financing Situation:
The Company was seeking to refinance its existing senior credit facility and move on to a new lending relationship to better support the strategic initiatives of the Company. The existing credit facility was based on enterprise value and thus required a comprehensive debt facility (beyond a standard ABL facility) for a full take-out plus additional working capital to support growth.

The Solution:
Super G provided a comprehensive financing solution that consisted of two tranches within the $3.5 million credit facility – $1.5 million interest-only loan and a $2.0 million amortizing term loan. This structure allowed the Company to close quickly (within 3 weeks) and provided debt service flexibilty so that the Company had working cpaital cushion and could focus on business execution. Super G worked closely with the Company’s majority shareholder, Elm Creek Partners, to get comfortable with the business and management team to fund the Company quickly.

For more information on Elm Creek Partners, please contact:
Aaron R. Handler
Co-founder and Partner
aaron@elmcreekpartners.com
214-871-5655
www.elmcreekpartners.com

The Company:

Software as a service platform that provides data management solutions to insurance agencies, government agencies, hospitals and other healthcare organizations. The Company’s service offering includes enrollment and network management, medical credential verification, continuous monitoring of provider data, and claims screening.

The Financing Solution:

The Company was in the process of raising a large strategic equity round and was seeking interim (“bridge”) capital to support its continued growth as well as general working capital cushion to alleviate equity closing pressure.  The Company had an existing senior term loan with an affiliate of funds managed by Fortress Investment Group (“Fortress”) secured by the Company’s intellectual property and all other business assets so traditional working capital solutions such as asset based lending/factoring were not an option due to seniority issues as well as insufficient borrowing base availability.  Additionally, given the anticipated time horizon to a large equity raise, the Company preferred non-dilutive capital versus convertible note/shareholder equity options.

The Solution:

Super G was able to work closely with Fortress to provide a $1.5 million structured working capital solution by carving out specific contracts as collateral and lending against the annual value of those contracts (i.e. Super G was senior secured on specific contracts and second lien on all other assets). This allowed the Company to have much more access to cash immediately then they could with a traditional asset based lender. This unique structure combined with non-dilutive capital were the key points of difference when the Company made its bridge financing decision. In addition to the contract collateral, the key underwriting criteria for this deal was the Company’s unique software offering, the management team, customer stickiness, and ability to service Super G’s debt through operational cash flow in the event an equity raise does not occur.

For more information on Fortress Investment Group, please contact:

Yoni Shtein
Vice President
yshtein@fortress.com
415-284-7415
www.fortress.com

 

The Company:
Company provides lease crew services and equipment rentals to leading exploration and production companies in South and West Texas.

The Financing Situation:
The Company was seeking growth capital in addition to its existing asset based financing. The Company had equipment financing in place as well as a flexible factoring arrangement with FarWest Capital and could not unlock additional availability from its existing collateral. The Company needed to raise equity or find an airball (stretch piece) financing solution based on cash flow and enterprise value.

The Solution:
Super G was able to quickly get comfortable with the Company’s growth plans and management team to close on a multi-tranche growth capital facility that solved the Company’s immediate and future capital needs. Super G worked closely with the Company’s existing lender, FarWest Capital, to finalize an intercreditor agreement and fund the Company quickly.

For more information on FarWest, please contact:

Jason Lippman
Executive Vice President
jason@farwestcap.com
512-527-1126
www.farwestcapital.com