Our customer is a construction firm specializing in alternative energy, including site preparation and construction of large scale wind and solar projects. More than 60 years old, by 2011 it had considerable focus in alternative energy construction and was purchased by one of the largest private equity firms in the U.S. Customers include large, national and global developers and utility contractors, including EON (Europe’s largest energy company with operations in Europe, Russia and North America); APEX; Enbridge, Nextera, EDF Renewable Energy (French), Exelon, and ENEL to name a few.
In 2013, revenues were a half billion dollars, with a ten year track record of profitable revenue growth in the alternative energy segment, however the company ran in to trouble with its rapid expansion into the Canadian market. Several large scale projects, posed huge technical and financial challenges for the company at large and specifically its Canadian operating division. In 2015 company revenues declined by more than 50% to $206mm and the company became unprofitable for the first time in its history, struggling to meet its debt service requirements. In September 2016, the company was able to settle with its major Canadian clients, and discontinued Canadian operations.
Given the client’s financial challenges and the uncertainty of the pending Canadian settlements, the customer was struggling to secure equipment financing. Although the situation was challenging, First National was able to structure a solution. In March, after a few quarters of positive EBITDA and demonstrating they were able to service current debt obligations, we tapped our significant syndication market relationships.
First National developed enough confidence in the client to invest in the equipment’s equity position, which in turn gave our syndicate partner the confidence to provide the debt component of the financing. The first approval was for a $5mm tranche of cranes. The financing was completed prior to the settlement of Canadian operations.
The next financing was for a $2.4mm crane needed for a time sensitive job for US operations. Again, First National stepped up by provided the equity investment in the equipment for a leveraged lease. The customer was apprehensive about end of term residual risk, so First National provided certainty around end of term payment requirements.
As client performance continues to improve, First National responds with more favorable rates and terms. Today the customer is back to a half billion revenue run rate. Projections call for revenues in excess of $700mm by 2018. The customer is currently implementing a $20mm equipment line of credit with First National at pricing that is far more in line with its historical borrowing rates. First National is a long term financial partner that is flexible in providing the best possible financial solution even when things are rapidly changing.