Rosenthal & Rosenthal completed a $30 million inventory purchase commitment to support the production financing requirements of a California-based importer and distributor of solar panels.
The company had been experiencing moderate sales growth from its existing customer base. Due to the increasing demand for solar energy solutions, the company began to expand its customer base in the U.S. Production cycle timing, a challenging shipping schedule and ongoing freight and logistics issues impacting importers from Asia prompted the company to explore additional financing options as an alternative to raising equity with its existing third-party factoring company. The third-party factor introduced the client to Rosenthal & Rosenthal to assist the client in structuring a purchase order financing solution.
The purchase order financing facility allowed the company to fulfill new and growing sales opportunities without pursuing an equity raise alternative, which would have diluted ownership for the existing management team and shareholders. Cash against document payments were used to fund the inventory cost and were paid to the company’s overseas supplier. Cash funding was also provided for fulfillment and logistics costs. The financing solution created additional factoring of the accounts receivable for the third-party factoring company as well as access to additional liquidity for solar panel distributor. This additional liquidity was over and above the repayment of the purchase order financing provided by Rosenthal & Rosenthal, accelerating the cash flow cycle of the overall transaction.
“Rosenthal was honored to be referred to this transaction by a third-party factoring company who we have successfully partnered with on many other transactions. We were pleased to assist this growth company execute on the large opportunities in their sector, which will help to transform their market position in the solar energy industry,” Paul Schuldiner, division head at Rosenthal & Rosenthal, said. “While there is currently an abundance of liquidity available in the debt and equity markets, this transaction highlights why teaming with a highly experienced and well-capitalized purchase order financing source can be an attractive growth capital solution for privately held companies.”
