Super G Capital provided a $2 million term loan to a producer of parts for OEM manufacturers in the agriculture, construction, mining, and oil and gas industries.
The company was seeking additional working capital to create availability on its line of credit and fund growth initiatives. The company’s asset-based lender, North Mill Capital, which is not affiliated with Super G, was providing a flexible, asset-based credit facility with favorable advance rates on accounts receivable & inventory. Given the cyclical nature of the industry, the company was seeking additional cushion on its credit facility.
Under similar situations, Super G typically provides a second lien loan and enters into an intercreditor agreement with the senior lender(s). However, since there were multiple senior secured equipment lenders in this situation, negotiating and entering into intercreditor agreements with all would be cumbersome and delay the closing timeline. Super G and North Mill determined the most efficient process to close the loan was a junior participation agreement in which Super G participated in North Mill’s credit facility as a “last-out” participant. This allowed the company to obtain an additional $2.0 million of capital in less than three weeks via North Mill’s asset-based facility.
