Mountain Ridge Capital and Great Rock Capital jointly closed a $75 million senior secured credit facility for HOP Energy, a heating oil company offering a range of energy services. Mountain Ridge served as the administrative agent and collateral agent for this transaction, but the deal was a collaborative effort.

Investment bank Crown Partners introduced Mountain Ridge to HOP Energy, which was searching for a $75 million asset-based loan that was more flexible than its current bank-led ABL, with a deadline to close by mid- December. Given the deal size and hold amount, Mountain Ridge decided it made sense to partner with another lender.

“I’ve known many of the team members at Great Rock my whole career,” Craig Winslow, CEO of Mountain Ridge Capital, says. “Given our longstanding relationships, I felt Great Rock would be a valuable partner for this opportunity. We co-proposed and co-underwrote the transaction, closing the deal each holding 50%.”

Given that December, January and February are the most important months for HOP Energy, Mountain Ridge and Great Rock only had a few weeks to close the deal. The company engaged Mountain Ridge and Great Rock on the Sunday of Thanksgiving weekend in 2022, and the deal closed on Dec. 20, 2022. Unfortunately, the months immediately following the deal closing were some of the warmest winter months on record.

“As you can imagine, heating oil demand was down because last winter was warm, so the company was off of their projections and not in compliance with their covenants that we just negotiated,” Winslow says, noting that his team worked with the management team, the equity sponsor and Great Rock to restructure the deal to meet the client’s current situation. “We underwrote what the rest of 2023 would look like based on the company’s new budget. We reset covenants and got the company on solid ground right as we come into this next heating season.”