Daily News: March 9, 2017

King Trade Capital Provides $4MM PO Facility for Chemical Supplier

King Trade Capital (KTC) provided $4 million in purchase order financing for a chemical trading company in the Northeastern U.S.

The company asked KTC to provide an immediate financing solution to help fulfill time sensitive deliveries of a chemical additive used to produce latex paint.

However, the client was a relatively new company with no significant financial history. However the principal had many years of experience in the industry and had developed strategic relationships in the U.S. and overseas.

The client’s end customer was a large U.S. producer of paint and needed this additive to avoid a complete plant shut down during the busiest time of the year. Three of the four U.S. plants that produced the chemical additive had been temporarily shut down. This created a significant demand for the additive from overseas producers.

KTC’s client had strong relationships overseas and was able to source product for its customer at a fixed price. The end customer placed more than $4 million in orders for immediate delivery to lock in supply. KTC’s client approached banks with what he felt was a well-structured and secure trade. However, KTC’s client’s principal learned he was unable to finance the deliveries with traditional lenders based on his short financial history and small balance sheet. He needed letters of credit quickly to secure payment to the overseas factory in order to make the deliveries.

KTC was able to underwrite the company and the entire trade transaction to provide a finance solution utilizing a letter of credit. The letter of credit allowed the supplier to meet the time sensitive ship dates from overseas. The financing provided by KTC will enable its client to fulfill deliveries on time.

KTC was able to work directly with its client’s end customer to structure a direct repayment since the end customer agreed to pay upon shipping from the overseas port. Currently, product is being staged and shipped and the end customer is issuing more orders for follow on deliveries based on the client’s ability to execute.