Daily News: December 3, 2013

KTC Provides PO Facility for Importer

King Trade Capital announced it provided a $2.25 million purchase order finance facility for a Pennsylvania-based importer of sports fitness equipment owned by a private equity group.

KTC was introduced to the client by an asset-based lender who was working on providing an overall formula-based revolving credit facility for the importer. During the course of the asset-based lender’s due diligence, the importer obtained a significantly larger order than expected from a major retailer. Given that the importer was to be new client, the asset-based lender did not wish to underwrite an over-advance nor did the private equity group wish to provide additional short-term funding, as doing so was not their investment model.

The asset-based lender suggested that the importer utilize KTC’s purchase order finance program to support the funding of the inventory required to fulfill the large order. An intercreditor agreement was established between the asset-based lender and KTC while KTC worked with the company’s private equity investors to guide them through the purchase order finance due diligence process.

KTC quickly established a facility that provides financing with an advance rate of 100% of the cost of the required inventory by issuing letters of credit to the company’s overseas suppliers as well as cash funding for logistics costs.

With KTC in place, a win-win scenario was created for the asset-based lender, who was able to suggest KTC as a solution to their prospective customer’s problem; the private equity group, who was able to leverage off of KTC’s financing and use their investment funds for core purposes rather than short term finance needs; and the importer, who was able to fulfill the large and growing profitable sales orders that they worked hard to obtain.