Private Equity Backed

SG Credit Profile: Software & Technology

The Company: X1 is a market leader in remote preservation and ESI collection software. The Company’s products are utilized by F500 companies, law firms, and government agencies for legal, compliance, and governance purposes.

The Financing Situation: X1 required growth capital to continue new product development and to bolster its enterprise sales team.

The Solution: SG was supportive of the transaction given the Company’s ARR growth, strong enterprise customer retention, and continued investor support. SG structured a $2.5MM non-dilutive credit facility around the Company’s ARR, allowing existing investors to capture upside in enterprise value generated by additional growth. SG moved quickly to close the transaction within three (3) weeks.

Stonegate Capital is excited to announce it has closed on a senior debt investment in Clio Snacks. Founded in 2015 by Sergey Konchakovskiy, Clio offers a line of handheld Greek Yogurt Bars and Granola & Yogurt Parfait Bars that combine the benefits of whole milk Greek yogurt – which are high in protein and probiotics – with an irresistible cheesecake-like texture and decadent dark chocolate coating. Clio recently launched three new innovative additions to its refrigerated, handheld bar portfolio: Chocolate Greek Yogurt Bars, Vanilla Less Sugar Yogurt Bars and Vanilla Almond Granola & Yogurt Parfait Bars.

“Clio is an innovative fresh snacking brand and we are ecstatic about our partnership with the Company. We pride ourselves on aligning with the high-growth, entrepreneurial backed market, and this thesis aligns perfectly with Clio’s exciting market disruption in the healthier for you snacking space” said Jordan Hoppe, Director at Stonegate Capital. “We are certainly looking forward to being a collaborative partner in Clio’s already impressive growth story.”

Stonegate Capital, a division of SG Credit Partners, is a private credit investment firm with a unique approach to providing financing solutions to established lower middle market businesses with a heightened focus on emerging brands within the food and beverage, consumer products, and e-commerce spaces.  Recognizing that each company has unique and specific needs, Stonegate focuses on aligning senior credit facilities to the growth and liquidity requirements of a business.

Please visit the Company’s website for additional information:

www.cliosnacks.com

For additional details regarding Stonegate Capital’s investments, please contact us directly at:

www.sghcap.com

Jordan Hoppe: 312-971-8136 | jhoppe@sghcap.com

Evan Waggoner:  336-512-6388 | ewaggoner@sghcap.com

Dan McCallum: 312-971-9445 | dmccallum@sghcap.com

Ryan Woody: 312-971-1551 | rwoody@sghcap.com

Andrea Hedrick: 773-562-8477 | ahedrick@sghcap.com

SG Credit Profile: SaaS

The Target: Corporate travel and entertainment software, data integration, and business intelligence (BI) provider for large enterprises and travel management companies.

The Buyer: Enterprise software operating company backed by private equity.

The Financing Situation: The Buyer was seeking a debt facility to supplement the equity contribution made to purchase the Target.

The Solution: SG structured a $4 million term loan to support the closing of the acquisition. SG was able to get comfortable based on the Company’s recurring revenue, strong SaaS metrics, experienced management team, and the strength of the Buyer.

SG Credit Profile: SaaS

The Company: Provider of procurement and spend management software to mid-market businesses.

The Financing Situation: The Company had legacy bank debt from a previous acquisition that was underwritten primarily by cash flow, not recurring revenue. The Company’s growth plan called for re-investing all excess cash flow into growth, which conflicted with the profitability-based covenants of its existing credit facility. The existing bank lender was unable to re-underwrite its loan based on recurring revenue so sought to exit the loan at maturity. The Company needed an experienced tech lending partner who better understood its SaaS business model and could scale with the Company as it executed on its growth objectives.

The Solution: SG structured a $2.75 million term loan to pay off the Company’s existing lender and provide additional liquidity to support its continued growth plan. SG was able to get comfortable based on the Company’s recurring revenue, strong SaaS metrics, and experienced management team.

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