SG Credit Partners (SGCP) provided a $5 million acquisition financing to support an energy-focused holding company’s acquisition of an oilfield service provider specializing in pipeline construction and the fabrication of modularized production facility equipment.
The target company management wanted to sell its oilfield services business for liquidity and to focus on larger infrastructure projects. Given the timing of new infrastructure projects, the company management wanted to sell its oilfield services business within 30 days. The company management had a personal relationship with the acquiring company management and presented an exclusive, quick closing acquisition opportunity.
Since the target company is asset light (primarily just accounts receivable with a progress billing element), an ABL facility was insufficient to close the entire deal and a bank offering a revolver and a cash flow term loan would have taken too long.
SGCP had previous lending experience with the acquiring company management. With the strong historical financial performance of the target company and industry tailwinds, SGCP provided a $5 million bifurcated credit facility to close the acquisition within three weeks and provide additional working capital. The SGCP credit facility consisted of a $2 million interest-only loan and a $3 million term loan.
SGCP provided this structure to close the acquisition quickly and bridge the company to a new senior lender. The new senior lender will refinance SGCP’s $2 million interest-only loan and SGCP will then subordinate its $3 million term loan under its typical second lien structure.
