Rosenthal & Rosenthal completed a combined $5 million inventory production and asset-based lending deal for a private equity-owned manufacturer of specialized LED lighting systems for the horticulture and cannabis sectors.
Headquartered in Texas, the company is part of the portfolio of a large New York-based private equity firm specializing in agricultural-related investments.
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With traditional farming and cannabis suppliers relying more on specialized LED lighting to improve indoor production and enhance product yield, the company was facing a larger and expanded order book. While the company’s long-term capital needs were being supported by the private equity group, the client still required growth working capital to address the uptick in sales orders it was experiencing.
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Rosenthal’s combined $5 million production/work in process and asset based lending program allowed the client to obtain the required components from multiple domestic and overseas suppliers, both by issuing letters of credit and domestic purchase guarantees, as well as cash funding for direct labor and logistics costs. Once the components are received, the company’s proprietary technology will be added to complete assembly of the lighting equipment, before shipping and invoicing the end customer. As the resulting accounts receivable are created, Rosenthal’s asset-based lending facility will repay the production financing and provide incremental liquidity to the company.
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“Working with Rosenthal on this deal meant that the company did not have to look to the private equity group to fund its working capital needs,” said Rosenthal Senior Vice President Mark Collins. “Bundling purchase order financing with asset-based lending allows clients to effectively support short-term working capital needs, without putting undue strain on existing funding sources.”
