KTC Provides PO Facility for Consumer Electronics Importer
King Trade Provides announced the recent funding of a $10 million purchase order finance facility for a New Jersey- and Hong Kong-based importer and distributor of consumer electronics.
KTC was approached by an investment bank representing the company in a growth equity capital raise. The investment bankers were seeking a solution to provide capital needed to grow and support several new modular programs as part of a major product rollout at big box retailers. The investment bank determined after visiting with KTC that a purchase order finance solution in conjunction with a factoring relationship would provide the best solution to address the immediate capital needed for inventory and A/R financing of the company.
KTC quickly established a facility providing an advance rate of 100% of the cost of the required inventory by issuing letters of credit to the overseas suppliers. KTC’s facility was also structured with a sub-limit to cover related freight, duty and logistics costs as needed. The facility provided a bridge to cover the inventory costs that would have otherwise been funded through the equity raise. More importantly, KTC’s facility resulted in less dilution of existing equity interests as the capital need was reduced so the infusion from the equity raise can solely be used to support the marketing and infrastructure costs associated with the company’s rapid growth.
King Trade Capital established multiple intercreditor agreements with both the referring factor and the supply chain finance division of an international bank, allowing the company to finance its entire trade cycle using alternative finance channels dictated by the needs each major retailer.
As a result, the company will be able to meet the delivery time frame of the retailers’ load-in orders, laying the groundwork for future expansion with these major retail chains.