Located on the east cost, the company is a $125 million plastics processor (thermoforming, extrusion, rotomolding) and manufacturer of recreational equipment.
The customer historically used operating cash flow to rent trailers for temporary storage of their ever-increasing inventories. The need for additional inventory storage was most critical during their annual pre-selling season cash crunch and they were seeking financing for 16 year old trailers to meet the storage need. The company wanted to realize a 100% ROI from equipment acquisition in approximately 18 months. The second equipment requirement was for new thermoforming machines and associated equipment. On both transactions, the customer needed to preserve cash during their cash-tight months until inventory could be sold. Additionally, the customer had substantial credit capacity issues with their senior lender obstructing their ability to attain additional capital.
For their trailer needs, First National helped turn a high rental expense into an EBITDA improvement by structuring a capital lease on aged trailers. Additionally, a CAPEX line of credit was established to fund these trailers in multiple schedules/tranches as they became available to ensure a process with fewer invoices and saving countless hours of administrative reconciliations and paperwork.
The thermoforming project (including soft costs) was financed managing a 6 month lead time. First National was able to fund with progress payments so the customer could preserve their cash until inventory was sold.
On both transactions, we were able to provide the additional capacity denied with their senior lender, improve cash flows, preserve cash, increase ROI and reduce administrative burden.