Rosenthal & Rosenthal completed a $12.5 million inventory production finance deal for an importer of women’s footwear.
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The New York-based importer was restructuring its portfolio of well-established licenses, as well as its growing private label and e-commerce platform, all under its corporate umbrella. The company’s outside accountants, well known to Rosenthal, referred the client to Rosenthal to assist with financing during the restructuring process.
The restructuring impacted the company’s relationships with its overseas suppliers and its ability to extend additional open credit terms. In addition, the likelihood of impending tariffs also created further strain with the company’s overseas suppliers. The company first reached out to its existing lender – the factoring division of a large national bank – to alleviate the cash flow strain the business was experiencing. While the factor was supporting the company with an approved overadvance, the bank-owned factor was unwilling to increase the overadvance to the level required. As a result, the successful execution of over $50 million of sales to a combination of big box, specialty retail and other national department and discount retail chains was in jeopardy. Given the extraordinarily large seasonal inventory build, requiring additional open terms from suppliers or additional overadvances from its factor, neither of which were available, the client’s outside accountant recommended utilizing purchase order financing to assist with the increasing financing needs.
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Having previously partnered with Rosenthal, the outside accountant connected the client with Rosenthal. The Rosenthal facility allowed the client to obtain goods from multiple overseas suppliers by issuing letters of credit as well as funding all freight, duty and logistics costs. This provided a more soundly structured solution, as the overseas suppliers would now have the credit enhancement they required in order to ship.
By working together with Rosenthal and establishing an inter-creditor agreement, the bank-owned factor would not have to increase its overadvance, and moreover, was now in a position to have its existing overadvance repaid from the successful completion of the purchase order financing.
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“Rosenthal’s PO Finance Division has extensive experience in rehabilitating terms with overseas suppliers that have been compromised when businesses go through a restructuring,” said Rosenthal Division Head Paul Schuldiner. “Rosenthal’s long track record of success in working with third-party factoring companies and/or banks, overseas suppliers and logistics companies to address these mutual challenges of its clients’ international supply chains is frequently why we are called upon as a preferred resource. We look forward to assisting more companies, their lenders, and suppliers when either traditional purchase order financing for finished goods and/or work in process production financing is required to achieve a successful outcome for all parties.”
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Founded in 1938 by Imre J. Rosenthal, Rosenthal & Rosenthal is a factoring, asset-based lending and purchase order financing firm now led by the second and third generations of the Rosenthal family.
