Daily News: September 25, 2013

Phoenix Capital Secures $43MM for Thermoplastics Producer

Phoenix Capital Resources acted as the exclusive investment banker to a leading undisclosed North American manufacturer and compounder of Nylon 6, Nylon 6/66, Nylon 6/9, specialty nylons, polycarbonate and other polymer products.

The company was a former Phoenix Management Services client and had a long-term relationship with the firm. Due to the success of this relationship, the company again reached out to Phoenix to explore their refinancing alternatives.

Over the course of a year, Phoenix worked with the company to secure and expand its U.S. revolver from $16 million to $20 million with PNC and replace the factoring facility in Canada with a new $10 million ABL line from PNC.

Additionally, Phoenix was able to obtain a new $13 million term loan from VERITAS Financial Partners secured by the company’s Canadian real estate and equipment.

At the outset of the engagement, the company had $34.5 million in total debt outstanding and had a debt to EBITDA ratio of 6.63X. At close, the company secured $36.7 million in total debt and had a 6.3X funded leverage ratio. However, it went from less than $1 million in availability to nearly $9 million in opening availability post-closing. Moreover, the company’s annual debt service was reduced by nearly $1 million due to the interest savings associated with replacing the factoring facility with a more traditional ABL facility and the more favorable amortization schedule associated with the new secured term loan.

The transaction was led by Vincent J. Colistra and Patrick J. Hughes from Phoenix.

Vincent J. Colistra, senior managing director of Phoenix, remarked, “This financing provides transformational capital to the company. The $9 million in newly secured liquidity will allow the company to operate more efficiently, fund deferred CapEx and compensation, and pursue higher margin business as a result of being able to maintain higher inventory levels.”

The company engages primarily in the production of engineering thermoplastics through polymerization and compounding. It is also involved in resource recovery of recycled products and de-polymerization, for use by manufacturers as the primary material for the production of fiber, injection molded and extruded plastic products.