Rosenthal Trade Capital (RTC), a division of Rosenthal & Rosenthal, completed a purchase order finance facility to support an acquisition by a California-based private equity investor of a company in the footwear and lifestyle products industry.

In combination with a $20 million factoring facility from Rosenthal, RTC will provide a $9 million purchase order finance facility to assist with the funding of footwear products to fulfill a major seasonal order from a large big box retailer. The supply chain financing requirements of the transaction involved purchasing product from an international supplier via documents against payment, refinancing presold inventory on hand that the seller previously paid for and funding fulfillment and logistics costs.

The private equity investor was seeking an alternative financing resource to reduce the amount of third-party investment required to fulfill the acquisition and not dilute its equity. The overall financing solution included Rosenthal’s factoring facility as well as term loans from a bank and a subordinated debt funding source. By adding a purchase order financing program, Rosenthal not only alleviated the seasonal cash flow strain from the existing large sales log, but also helped to develop a substantial platform for future growth.

“By structuring alternative funding solutions that work in tandem with factoring and other multi-party senior and junior debt financing, we were able to address the capital structure requirements of a private equity sponsor,” said RTC Division Head Paul Schuldiner. “Innovative financing solutions like this one help to ease seasonal cash flow problems that acquired companies often experience when they undergo incremental growth.”