TradeCap Partners closed a $1 million purchase order facility with a jewelry and accessory company based in New York.
A private equity firm had recently completed a roll up of several entities under one holding company. The private equity firm structured a debt facility for the consolidated company, which was used in conjunction with advances from a factoring facility to support baseline working capital needs.
Larger seasonal orders and growing customer demand placed a strain on terms with overseas suppliers, which started requiring letters of credit and payment upon shipment for amounts in excess of terms they had been extending. The firm had no remaining “dry powder” in the fund and turned to a factoring company for help. The factoring company brought in TradeCap to provide a solution.
TradeCap underwrote the multiple operating subsidiaries of the holding company, negotiated a subordination agreement with the private equity firm and entered into an intercreditor agreement with the factor within a week of its introduction. The facility provided both letters of credit and cash payments against documents to international suppliers. Cash funding of freight and duties was also incorporated to further reduce cash flow constraints on the company.
TradeCap expedited closing and began making payments to suppliers, allowing the company to meet critical delivery dates with end customers. TradeCap’s facility provided the added leverage the private equity firm needed to support 100% of their portfolio company’s incremental supply chain finance requirements.
Bryan Ballowe, managing partner of TradeCap, remarked, “It was important for us to not only provide the necessary capital and structure the company was looking for, but also to navigate a relatively complicated underwriting engagement quickly to ensure delivery dates with key customers were met.”
