Private Equity Backed

SG Credit Profile: Technology (SaaS)

The Company: Software as a Service platform that provides AI-powered marketing analytics. The platform provides an end-to-end suite of tools that allow clients to research and measure their marketing investments and maximize ROI.

The Financing Situation: The Company’s existing bank credit facility was no longer a strategic fit and the Company was seeking additional non-dilutive capital to help execute on its growing sales pipeline.

The Solution: SG was able to get comfortable with the transaction due to the Company’s strong management team, blue chip customer base, enterprise value, and its supportive cap table. SG provided a $2MM senior secured facility with an interest-only period and modest amortization to payoff the bank and support the Company’s ARR growth with non-dilutive capital.

The Company: Sponsor-backed e-tailer of aftermarket auto parts focused on a niche of the broader aftermarket industry. The Company sells through its Company-owned DTC eCommerce channel as well as through 3rd party marketplaces. Revenue: $37MM | EBITDA: $1.4MM.

The Financing Situation: Over the past few years a series of events negatively impacted the financial performance of the Company including a heightened tariff environment in 2019. The Company was forced to recapitalize its balance sheet and restructure operations to right-size the business. The Company successfully executed its recapitalization in early 2020 by securing a temporary bridge working capital facility with an opportunistic lender. The bridge loan was off strategy for the new lender so it was seeking to exit the credit.

The Solution: SG was able to get comfortable with the Company’s proven operational turnaround, proforma profitability, inventory and receivable working capital assets, and supportive stakeholders including the sponsor, CEO, and key vendors. SG’s unitranche loan structure included a $1.4MM collateral based, interest-only term loan A driven by a borrowing base (AR and inventory) and a $700K term loan B structured around proforma cash flows. SG was able to close the deal within 2 weeks of a signed term sheet.

The Company: Sponsor-backed document scanning company that provides an array of workflow optimization services. The Company’s scanning service model, coupled with its cloud-based data hosting platform, enables it to transform physical documents to actionable digital data for its customers. Recurring Revenue: $12.5MM | Services Revenue: $3MM.

The Financing Situation: For the past few years, the Company was focused on developing its technology platform and implementing several key channel partnerships. Though the Company expects these dynamics to be fruitful in the long-term, the short-term effect was a decrease in profitability. The Company’s existing lender had provided a traditional asset-based line of credit based on eligible accounts receivable. This structure did not provide the Company with the flexibility it needed to expand sales and marketing initiatives through its new channel partnerships. Lender and borrower fatigue set in, so the Company went to market to find a debt partner that could a) look for value beyond just the assets, and b) scale with it as it executed on its growth strategy.

The Solution: SG was able to get comfortable with the Company’s strong pipeline of contracted revenue, return to profitability, revenue retention rate greater than 90%, and plethora of expansion opportunities through its new channel partnerships. SG provided a senior secured, $3MM growth capital loan structured around recurring revenue, proforma cash flow and total leverage.

The Company: Enterprise SaaS platform that enables companies to prepare and oversee RFPs and other business responses with speed, accuracy, and compliance. Recurring Revenue: $4.5MM.

The Financing Situation: The private equity backed Company was emerging from an operational restructuring and planned to rebuild its tech platform to increase functionality, improve UX, and drive sales. The Company’s existing bank lender was not willing to finance these initiatives so SG Credit was approached to refinance the existing bank lender and provide additional liquidity so the Company could execute on its plan.

The Solution: SG Credit provided the Company with a bifurcated loan structure consisting of a $1MM interest-only loan to refinance the existing debt and a $1MM term loan to finance the Company’s growth initiatives.  This structure provided the Company with 12+ months of runway and allowed the Company’s existing bank lender to exit the credit as desired.  SG Credit was able to close the deal within 3 weeks after quickly getting comfortable with the Company’s recurring revenue, client base quality, low churn, strength of the new management team, and continued shareholder support.

The Company:
Cloud-based media monitoring and intelligence platform with contracted, recurring revenue.
Revenue: $15mm | EBITDA: $1.5mm | Equity Raised: $10mm

The Financing Situation:
The Company had a line of credit as well as a term loan in place with a Bank. Due to lender fatigue and technical default (financial covenant compliance) the Bank wanted to exit the credit.

The Solution:
Super G was able to get comfortable with the business due to the recurring revenue, continued equity support, and strong management team. Super G provided a $2.0 million bifurcated credit facility to retire the Bank’s credit facility as well as provide additional working capital. Super G’s $2.0 million bifurcated credit facility consisted of a $750k interest-only loan and a $1.25 million amortizing term loan. Super G provided this structure to bridge the Company to a new senior lender. The new senior lender will refinance Super G’s $750k interest-only loan and Super G will then subordinate its $1.25 million term loan under its typical second lien structure.

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:
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:
Private equity backed, outsourced pharmaceutical service provider conducting clinical research.
TTM Revenue: $17mm |TTM EBITDA: $1mm

The Financing Situation:
The Company had a cash flow based term loan with its bank and was in technical default.  Given the combination of lender fatigue, lumpy sales & cash collections due to the timing of contracts, and high monthly payments on the term loan, the Company was seeking immediate relief.  An asset based lender was not a solution due to timing and the term loan take-out amount would not conform to a borrowing base.

The Solution:
Super G provided a $2.0 million senior secured, interest-only bridge loan for a full take-out of the bank and working capital to support the Company’s immediate financing needs – a flexible structure which will allow the Company to operate its business with sufficient liquidity and buy time to run a full process for a new bank relationship.  Super G was able to get comfortable with the sales lumpiness & YTD financial performance given the Company’s strong track record, accounts receivable collateral, enterprise value, and experienced management team.  Super G was able to close quickly (within 2 weeks) which benefited both the bank (removed loan from special assets) and the Company (covenant light loan, working capital cushion, and debt service flexibility).

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:

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.