King Trade Capital Facilitates Cross-Border Transaction
King Trade Capital (KTC) notes in a news release that a CT/CA-based distributor of home goods and accessories approached KTC with a problem and an opportunity. KTC said for many years, the client had sold to a major retailer in Mexico. The opportunity was the client had received $2.5 million in non-transferable letters of credit from their foreign buyer to buy their home goods. The problem was the client needed $1.9 million of financing to have the goods manufactured in India.
Historically, the client received transferrable letters of credit from their buyers enabling them to source goods through a simple transfer of the LC’s. Due to the increasing size of the program and a change in the retailer’s product sourcing, this was no longer an option.
KTC offered a solution and worked with the client to structure a back-to-back LC arrangement that offered the client’s supplier in India the payment security they needed to produce the goods. Through the use of LC’s issued by KTC which provided a 100% advance on the cost of goods, the client satisfied the terms from their supplier and fulfilled the largest sales orders they have received since the company’s inception, 10 years ago.
KTC said the customer in Mexico, realizing the client’s capability to handle larger orders, is now in discussions to expand their purchases from the company.