Marabek raises secured $7,000,000 loan to a specialty manufacturing business in 72 hours.
The Company: The 20+ year old sole proprietor owned manufacturing company based in the mid-Atlantic States required an emergency $7,000,000 bridge loan to help with a pending debt recapitalization within 72 hours or risk debt default with its senior lender.
The company had its assets secured through a $10mm working capital and special inventory credit line. As all the assets were pooled by the senior lender, they settled their cash needs with accounts receivables factoring service with another bank that required customers pay a lock-box.
- Revs FY’21- $71,000,000
- Assets- $37,500,000
- Liabilities- $34,000,000
- A/R- $6.4mm DSO 58 days
- A/P – $4.7mm DPO 47 days
The Situation: The Company had a massive uptick in business and needed capital to pay their suppliers to keep the order pipeline strong. The company was tapped out on current bank lines and was a few days from its subsequent recapitalization which presented a drag on cash that they needed to fulfill.
Investment thesis: “No time to waste shopping around…”
Marabek felt confident in the company’s ability to recap its debt or get a new WC line to pay back a bridge loan. The company signed agreements with a specialty lender putting fresh capital up in 45 days. Outside of that, this company had “no time to waste shopping around for a bridge loan.” The company has total equity of $3.5mm. They also have $34mm of total debt outstanding at any given time. The lender provided a subordinated loan with a springing lien to file a UCC. If they were to default on the debt, the lender file a UCC alerting all other creditors that they are would be in default; they would then have over a $38mm debt (with penalties) problem to deal with and risk the possibility of losing all their equity. Senior lender recapped the new debt and extended additional WC to accept new orders for growth.
Marabek found a strong financial partner to help bridge the emergency cash needed and provided access to secondary capital in a short window. With over 145 national banks, lenders, specialty investors and private capital within our network, we can facilitate complex capital needs with expediency.
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