When the COVID-19 pandemic slowed sales and disrupted supply chains for a Midwest supplier of pipes, valves and oil transmission products and services, the company and its private equity partner needed a flexible solution. Republic Business Credit provided a $5 million factoring facility with options to offer the best fit. The private equity fund and the supplier chose Republic’s ledgered line of credit that features the pricing structure of an ABL facility.
The solution was quicker and more scalable than an asset-based loan.
The supplier of pipes and valves is based in Kansas City, MO. Its top three customers are large gas and energy companies. Sales from the three represented 53% of total revenue at FYE 2021. The company provides value-add modifications of valves that are complemented by pipes, fittings and other distributed products to various midstream natural gas customers.
But COVID-19 and the ramp-down of a major project caused the company to seek out unique solutions and a creative finance package.
“We consistently partner with private equity for both of our ABL and factoring solutions,” Robert Meyers, president of Republic, said. “We find that while people might prefer ABL on the surface, in reality they often like the flexibility of a factoring facility when the situation fits. As we continue to build out our suite of products, we are proud to see private equity and independent sponsors represent more than 40% of our clients and believe we are a rare dynamic partner who can provide working capital solutions to most portfolio companies.”
The pipe and valve supplier anticipates its performance will improve as customers order more product, supply chain issues improve and margins increase due to headcount reductions and the renewal of the company’s direct relationship with its main supplier. The company was founded in 1956. In 2016, it filed for bankruptcy. Assets were acquired through a stalking horse bid of approximately $25 million, which was court approved that same year.
The company now operates out of six facilities across the United States.
“We believe our suite of lending and factoring products will be more in demand as companies work through the growing uncertainties of 2023 and beyond,” Stewart Chesters, CEO of Republic, said. “This company is an example of that — how the unique financial products we offer can be a lifeline when traditional banking products aren’t a good fit.”
