A revolving credit facility, also known
as a "revolver," is designed to optimize the availability
of working capital from the borrower's current asset base.
As the borrower repays a portion of the loan, an amount equal
to the repayment can be borrowed again under the terms of
the agreement. Eligible assets commonly included in calculating
the current asset base are accounts receivable and inventory.
The term "revolver" is used because
the amount to be borrowed increases if the amount of the assets
securing the loan increases. Funds are loaned to a company
based on a certain percentage of the value of eligible accounts
receivable and inventory. Such loans are limited by the predictability
of cash flow to service the debt.
A revolving line of credit typically has
a term of one-to-three years with renewal provisions. The
advantage of a revolving credit facility is that
This is typically based on a certain percentage
of the orderly liquidation value of the machinery and equipment
and the appraised fair market value of the land and buildings.
This loan is secured or collateralized
against equipment and real estate and is often structured
in the form of a term loan that typically includes regular
periodic payments of principal and interest in order to retire
the debt at a fixed maturity date. On the other hand, loans
using real estate as collateral have longer maturity provisions
than equipment loans, due to the shorter economic life expectancy
of equipment.
TOP
Managing cash flow to keep up with operating
needs is a challenge facing many businesses. We can meet your
working capital financing needs with a full range of financial
solutions. We can provide financing in the form of term loans,
lines of credit and can help you accelerate cash flow from
your inventory or accounts receivables. At times, working
capital loans are needed to bridge financial gaps during the
lifecycle of a business. Working capital loans can be secured
by a variety of asset types, including accounts receivable,
inventory, equipment, and/or real estate.
TOP
When times are tough sometimes strong
companies will act to buy other companies to create a more
competitive, cost-efficient company. Companies will come together
hoping to gain a greater market share or to achieve greater
efficiency. Because of these potential benefits, target companies
will often agree to be purchased when they know they cannot
survive alone.
When one company takes over another and
clearly established itself as the new owner, this type of
purchase is called an acquisition. Thus, the target company
ceases to exist, the buyer "consumes" the business
and the buyer's stock continues to be traded.
On the other hand a merger happens when
two firms, often of about the same size, agree to go forward
as a single new company rather than remain separately owned
and operated. This kind of action is more precisely referred
to as a "merger" Both companies' stocks are surrendered
and new company stock is issued in its place.
Weather you need an Acquisition to acquire
a strategic partner, a competitor or grow a company we have
resources that have experience and can get the deal done.
TOP
Turnaround financing may be the solution
and is often used by under-performing businesses that are
not achieving their full potential. In some cases, it is used
for businesses that are either insolvent or on their way to
becoming insolvent.
If your company has experienced the following
challenges then turnaround financing may be the solution.
Typically one of the following problems is a sufficient indication
that drastic turnaround action may be a serious consideration.
• The
company has been reporting large losses for some time
•
Paying suppliers is difficult
• Paying
taxes and other "non-immediate" obligations is a
problematic
•
Important jobs generate a loss
•
Lenders and suppliers are not giving the company
the breathing room they used to
•
Good clients are leaving the company
•
Clients complain their calls aren't being returned
•
A number of employees communicated to each other,
Management, clients or suppliers, that
they do not feel they are being led
•
Several good employees are leaving the company
•
Management is no longer working as a team.
Some turnarounds and restructurings require
an injection of cash by third-parties and the rules that govern
obtaining this special financing is different for potentially
distressed companies than for healthy companies. Most troubled
companies that require funding fail to obtain it because they
do not know where to locate these funding sources.
We have the resources to get you
the professional and experienced niche financing needed to
turn your company around for a successful second chance.
TOP
If your company needs to maintain or increase
the scope of its operation then capital expenditures will
be necessary at some point in your company’s life cycle.
A capital expenditure is a newly purchased
capital asset or an investment that improves the useful life
of an existing capital asset. If an expense is a capital expenditure,
it needs to be capitalized; this requires the company to spread
the cost of the expenditure over the useful life of the asset.
However if the expense is one that maintains the asset at
its current condition, the cost is deducted fully in the year
of the expense.
We are here to assist your company meet
its goals and obtain financing needed to grow your business.
TOP
Bankruptcy is a complex and often emotional
business challenge. Contrary to popular beliefs bankruptcy
and failure are not synonymous.
Debtor-in-possession (DIP) refers to a
company that has filed for protection under Chapter XI of
the Federal Bankruptcy Code and has been permitted by the
bankruptcy court to continue its operations to implement a
formal plan of reorganization. The DIP company can still obtain
loans, but only with bankruptcy court approval.
DIP financing may depend on the perceived
possibility of the company’s ability to successfully
complete a Plan of Reorganization (POR). The Plan of Reorganization
must specify how the debtor intends to pay the creditors.
This financing is beneficial because it
provides prepackaging for corporate bankruptcy which outlines
and shows the process of how the lender providing financing
will distribute funds to work out a settlement with creditors
up front.
Solid planning including financing can
help turn your company around. We have lenders that have creative
bankruptcy financing solutions that provide capital during,
or upon surfacing from voluntary or involuntary bankruptcy.
TOP
Typically, as a company grows its need
for financing increases. As a company's collateral grows its
assets can strengthen its ability to borrow. We have experienced
lenders that can assemble a credit facility that can scale
to grow with a company.
TOP
Recapitalization is the process of revising,
modifying or altering a company's capital structure with the
aim of making a company's capital structure more stable. Essentially,
the process involves the exchange of one form of financing
for another, such as removing preferred shares from the company's
capital structure and replacing them with bonds.
Recapitalization can be implemented for
a number of reasons, such as defending against a hostile takeover,
minimizing taxes or to implement an exit strategy for venture
capitalists. Recapitalization is a strategy where a company
takes on significant additional debt with the purpose of either
paying a large dividend or repurchasing shares. A good example
is when a company issues stock in order to buy back debt securities,
thus increasing its proportion of equity capital as compared
to its debt capital.
Whatever phase your company is in we have
the resources that have extensive experience to guiding your
businesses through the stages of recapitalization.
TOP
If your company has entered or exited a
growth stage and would like to refinance company debt, restructured
financing may be the key element in creating additional capital
that better meet the needs of your company.
TOP
In the corporate world companies do what
is necessary to survive, maintain their market or fortify
their competitive edge. In some cases a company may buy out
smaller competitors and sometimes they may have to defend
against being taken over by larger companies. Buyouts are
common and in some cases become necessary for companies to
exist.
Typically when a buyout occurs the acquiring
company uses a significant amount of borrowed money (bonds
or loans) to meet the cost of acquisition.
A buyout is the purchase of a controlling
percentage of a company's stock. In a leveraged buyout (LBO),
the acquiring company uses the minimum amount of equity to
purchase the target company. Often, the assets of the target
company are used as collateral for the loans in addition to
the assets of the acquiring company. The target company's
assets are also used as collateral for debt, and its cash
flow is used to retire debt accrued by the buyer to acquire
the target company. A management buyout (MBO) is an LBO led
by the existing management of a company. Most LBOs are also
MBOs.
In most cases, the management will buy
out all the outstanding shareholders and then take the company
private because it feels it has the expertise to grow the
business better if it controls the ownership. Quite often,
management will team up with a venture capitalist to acquire
the business because it's a complicated process that requires
significant capital.
The purpose of leveraged buyouts is to
allow companies to make large acquisitions without having
to commit a lot of capital. A company's success (in the form
of assets on the balance sheet) can be used against it as
collateral by a hostile company that acquires it therefore;
some consider LBOs as a ruthless, predatory tactic.
If you are looking to buy out a smaller
company, a competitor or want to make large acquisitions without
having to commit a lot of capital we have resources with experience
to help you succeed.
TOP
By formulating an ESOP plan for stock owners
you have the ability to encourage and lead participants to
do what's best for the company shareholders, since the participants
themselves are shareholders.
An ESOP (Employee Stock Ownership Plan)
is an equity compensation system which the sponsoring company
typically leverages its credit to borrow money, which it then
uses to fund the plan, in order to purchase company shares
from the company's treasury. The shares are used for the purposes
of the stock ownership plan, and the company pays back the
original loan with annual contributions.
A leveraged ESOP allows a company to raise
its capital-to-asset ratio by issuing new shares of stock
to an employee trust, which finances the transaction with
an asset-based loan. The ESOP loan is repaid in pretax corporate
dollars, and dividend payments to employees as well as the
dividends reducing the bank loan which are tax-deductible
expenses.
Typically, companies choose to use stock
ownership plans or equity compensation systems in order to
tie a portion of their employees' interests to the bottom-line
share price performance of the company's stock. In this way,
all employees who participate in the plan have an incentive
to make sure the company's operations run as smoothly as possible.
By leveraging the company's assets to fuel an ESOP plan, the
business is able to provide for its stock ownership plan without
immediately putting up all the capital required to do so.
TOP
|
