Manufacturing & Industrial

The Company: Industrial recycling company that sells processed and unprocessed materials to domestic and international mills, foundries, and other material processors. Ownership: Family-owned. Financial Profile: $40 million of revenue.

The Financing Situation: Management was exploring a sale of the Company and needed additional working capital beyond the availability on their asset-based credit facility. SG was approached by the Company’s bank ABL to provide a second lien working capital loan to enable the Company to run a sale process without any potential for liquidity shortfalls.

The Solution: SG Credit Partners was able to quickly get comfortable with the Company’s financial profile and provided a $1.5 million loan with interest-only payments to give the Company maximum liquidity throughout the sale process. The loan funded within three weeks of a signed term sheet, alleviating liquidity constraints and allowing management to focus on selling the Company.

SG Credit Partners’ second lien loans can help senior lenders close deals (onboard new clients), offer a liquidity solution when unable to lend up (retain existing clients), and/or solve out-of-formula / technical default issues.

The Company:

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.

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 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.

For more information on North Mill, please contact:

Heidi Ames
Senior Vice President
hames@northmillcapital.com
609-917-6207
https://www.northmillcapital.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:
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:

Provider of nationwide parcel logistics services (transportation) and parcel shipping & management software. The Company’s services and software help customers manage an control their business, drastically improve delivery and lower transportation and postage cost.

The Financing Situation:

The Company’s software side of the business won a new large contract and needed upfront working capital to support the implementation costs associated with the contract. Factoring was not an option for the Company due to the milestone nature of the billing.

The Solution:

Super G was able to quickly get comfortable with the software business, the new contract structure, and management team to close a $750,000 loan to solve the Company’s working capital needs. Super G worked closely with the Company’s existing factor, Eagle Business Credit, to finalize an intercreditor agreement and fund the company in 2 weeks.

For more information on Eagle Business Credit, LLC, click here or contact:

Ian Varley

CEO

ivanvarley@eaglebusinesscredit.com

The Company:

A sponsor-backed company which engineers, manufactures, and sources customized user-interface and product identification components for customers in the medical, aerospace, industrial, and consumer industries.

The Financing Situation:

The Company was in the process of transitioning from its commercial bank lender to an asset based lender, Marquette Business Credit, and Super G helped complete the financing structure.

The Solution:

Super G was able to get comfortable with the Company’s continued improvements, growth strategy and senior management team. Underwriting and approval process of the 2nd lien loan took place quickly allowing Marquette to present a comprehensive solution to its credit committee.  Super G’s  flexible structured solution, covenant light loan documents, and rapid decision making allowed for an efficient and seamless closing.

The Company:

A leading designer and manufacturer of software, hardware and related accessories for professional audio recording and live sound applications worldwide.

The Financing Situation:

The Company had engaged an investment bank to arrange a more flexible credit facility that would scale with the Company’s anticipated growth.  To avoid pressures on shipping windows during the investment banking process, and pending completion of a new senior debt facility, the Company projected extra working capital requirements which created a need for 2nd lien debt capital that could close quickly.

The Solution:

Super G underwrote and approved a 2nd lien term loan within weeks and worked in partnership with the existing senior lender on an intercreditor agreement to close the transaction quickly given the time sensitivity.   Super G was able to address the short-term capital need with a structured solution that provided a custom repayment schedule and our covenant light documents made it easy for the investment bankers to continue their debt raise process.  Following the closing, the Company was successful in replacing its senior capital with a more flexible lender.