The Company:
The Company is a privately owned packaging manufacturer specializing in large, one-piece corrugated boxes. From its two manufacturing sites in the Midwest, the Company serves customers in various industries. It has also developed a proprietary product targeting the construction and special event markets. It was formed when assets of a predecessor company were purchased out of bankruptcy by one of its managers.
The Catalyst:
Management plans to expand the Company’s product lines and geographic reach. This takes capital. Over time, the Company had obtained loans from different institutions. As a result, its financing costs were higher than necessary. To streamline its credit facilities and free up capital through lower financing costs, they decided to consolidate loans with a single lender. Traditional banks weren’t an option because the Company was essentially a new entity with limited operating history.
The Solution:
Enter First Community Financial. We didn’t see a tainted company, but one with promise. We got to know the team, their new strategy, and the reasons for the bankruptcy. We put in place a $1.8 million financing package: a two-year, $1.5 million revolving line of credit to consolidate loans and provide working capital support, and a $300 thousand term loan with creative repayment terms. The Company can finance up to 85% of eligible receivables and 40% of eligible inventory under a sublimit. We approved a special concentration limit for receivables from a large, well-known customer. The loans are secured by all Company assets including real estate as additional collateral. Financial covenants track the Company’s performance in critical areas, while the owner’s personal guarantee adds support.
The Result:
By taking the time to understand the Company and listen to its management team, First Community Financial was able to help them achieve their goal of consolidating credit facilities and reducing overall financing costs. Our team of experienced professionals designed a package to do that – and more.
Innovative solutions and extraordinary service: the First Community Financial difference.
