CASE STUDY
The Client:
A plastics manufacturer specializing in stackable storage bins and organizational products serving retail, industrial, and consumer markets with injection molding capabilities and proprietary designs. Under new private equity ownership following a distressed acquisition, the company represented a classic turnaround opportunity where operational improvements, capital investment, and improved customer service could restore profitability to a business that had emerged from Chapter 11 bankruptcy protection just three years prior. With established customer relationships and proven product designs that generated ongoing demand, the manufacturer needed substantial capital investment in injection molding equipment to meet customer orders, improve production efficiency, and achieve the profitability targets that would validate the private equity investment thesis and position the business for eventual sale to a strategic buyer or manufacturing conglomerate.
The Challenge:
The plastics manufacturer faced a perfect storm of challenges that would make traditional equipment financing nearly impossible. Having emerged from Chapter 11 bankruptcy only three years before the private equity acquisition, the company carried the stigma of recent financial distress that conventional lenders view as disqualifying regardless of new ownership or operational improvements. The business required large CAPEX investment to meet existing customers’ new demand and achieve profitability, but the capital-intensive injection molding equipment purchases would strain any available financing capacity. Rising resin costs were further compressing already-thin margins, creating ongoing profitability challenges that made lenders uncomfortable. Most unusually, the company needed to leverage its proprietary molds to generate working capital—specialized tooling assets with essentially no market value outside their intended use for this specific manufacturer, representing exactly the kind of non-fungible collateral that traditional lenders refuse to finance. The company was operating under forbearance with its senior bank lender, adding another layer of complexity as any equipment financing needed to navigate existing lender relationships and avoid triggering cross-default provisions. Without a lender willing to look past recent bankruptcy, finance specialized molds with no secondary market, provide substantial ongoing CAPEX capacity, and work cooperatively with the senior lender during forbearance, the PE-backed turnaround would struggle to fund the equipment investments essential to restoring profitability.
Solution:
First National Capital recognized that beneath the bankruptcy history and current financial challenges lay a viable manufacturing platform with established customers, proven products, and new private equity ownership committed to funding a successful turnaround. FNC provided 100% advance on $7 million in in-place, in-use injection molding assets, eliminating the need for down payments that would have depleted scarce working capital during the critical turnaround period. Understanding that ongoing equipment investment would be essential to scaling production and improving efficiency, First National established an additional $10 million in availability for future injection molding investments, providing the company with committed CAPEX capacity rather than requiring repeated financing negotiations that could delay critical equipment purchases. Most remarkably, FNC provided 100% advance on $7 million in proprietary molds on 2-year terms—financing assets that traditional lenders would view as having zero collateral value, but which First National understood were essential to the manufacturer’s production capabilities and therefore represented genuine value within the context of this specific business. The financing structure ensured minimal interruptions and distractions to daily operations, allowing management to focus on customer service, operational improvements, and profitability rather than constantly managing financing relationships. The customer continued utilizing First National’s capital for three years with $45 million in total funding as the turnaround gained traction, production scaled, and profitability improved, until the business eventually achieved a successful sale to a global manufacturing conglomerate—validating the PE investment thesis and demonstrating that FNC’s willingness to support a post-bankruptcy turnaround through flexible equipment and mold financing had enabled value creation that traditional lenders would have prevented.
It All Begins With A Conversation
We listen. We live out-of-the-box. We solve problems. And we get deals done. Let’s do this.
