Daily News: April 30, 2012

King Trade Capital Provides a $10MM LOC Facility

A U.S.-based electronic cigarette company approached King Trade Capital (“KTC”) seeking a finance solution to help ignite its sales with national retail chains.

The company had early success in the e-cigarette business but was hobbled by FDA intervention that limited their ability to sell their product. A lengthy legal battle ensued and eventually the company received a favorable court ruling supporting the importation and sale of electronic cigarettes. Our client’s product became the “gold standard” in the e-cigarette industry.

Based on a favorable decision by the federal courts our client was able to freely import its products and their sales began to skyrocket. Due to the lengthy legal battle much of the company’s capital was poured into legal bills and left them only able to maintain a small stock inventory for existing customers. Our client was in need of letters of credit to purchase inventory from its overseas suppliers in order to fulfill large orders it had received from national retail customers.

KTC came up with a supply chain finance solution utilizing its letters of credit to purchase the inventory needed to fill the growing orders and invited a national receivable finance company to provide financing on the A/R once the goods shipped to the end customers.

KTC along with a well-known asset based lender provided an end-to-end solution for the client and was able to underwrite the transaction within two weeks to provide a $10 million letter of credit financing facility.