TradeCap Partners closed a $250,000 purchase order finance facility with a well-known model toy company located in Texas.
The company had had strong operating results over the years but past management struggled to keep up with new consumer buying habits in the industry. With online sales replacing many brick and mortar outlets, the company experienced a significant dip in sales. Turnover of SKUs slowed and inventory levels inflated. The private equity owners decided it was time to make some significant changes to management and the capital structure in order to navigate headwinds.
A factor was brought in to provide additional liquidity for the company but an added layer of capital was needed to purchase pre-sold inventory from overseas vendors. Many had moved to cash-on-delivery terms following ballooning of payables due them. New management wanted to make a push into certain retailers that had been neglected due to insufficient inventory mix that resulted in late deliveries. Additionally, the company had recently established a relationship with an online retailer that was increasingly representing a larger portion of sales.
Having worked with TradeCap before, the factor introduced the firm to its client. TradeCap’s facility accommodated a letter of credit and the cash funding needs of vendors. It negotiated a subordination agreement with the private equity firm and utilized an already established inter-creditor agreement with the factor so new management could execute its business plan.
Bryan Ballowe, managing partner at TradeCap, commented, “We are humbled by the level of support from the private equity and accounts receivable finance community. We know these partners are looking for a trusted, professional team to structure finance solutions for their portfolio companies and clients. We’re grateful they turn to TradeCap to provide that solution.”
