Briar Capital Real Estate Fund and Pathward announced they each simultaneously closed new loan facilities totaling $23.9MM to a precast concrete company with manufacturing facilities in Houston and San Antonio, Texas.
Briar Capital provided a $8.9MM real estate loan facility secured by the company’s two manufacturing plants, while Pathward provided the company with a $15MM asset-based working capital facility, secured by Accounts Receivable and inventory. The combination of the two loan facilities helped retire the company’s debt at a regional bank, clear up past due payables, and provide access to working capital to address a substantial backlog.
As inflation began to rise in 2021, this business began to experience severe margin compression. While they were able to pass along higher material costs on some work, they were unable to do so in the majority, especially on the large-scale projects operating under long-term, fixed price contracts. Forced to absorb these higher costs, the company’s financial performance was impacted, and cash-flow became tight. They soon found themselves in trouble with their suppliers and in default with their bank who eventually demanded they move the lending relationship.
With the help of a prominent consulting and restructuring firm, the company introduced several performance improvement initiatives and began a process to identify a new lender to replace its current one. On the strength of their highly competitive product offerings as well as their relationship with one another, Briar Capital and Pathward were awarded the company’s financing business.
Jill Kirshenbaum, Briar Capital’s Senior Vice President, said, “I am always grateful for our partners in finance. When I got the call from a large Chicago Accounting firm, to assist with the restructuring of a Texas manufacturer, I was encouraged to know we not only have an incredible team, headquartered in Texas, but we also have an enormous network of partners in ABL who we are so lucky to partner with.”
Business Development Officer, John Trendell, who led the deal for Pathward echoed Kirshenbaum’s appreciation for the partnership and stated, “We are pleased to team up with Briar Capital to provide a forward-thinking, asset-based lending solution to help a mutual client and manufacturer turn around its books and stay in business. While traditional banks may discount businesses through tough times, Pathward works closely with clients and partners like Briar Capital to identify the client’s assets and how we can creatively use those assets as credit to help them rebuild and thrive.”
With both the Briar Capital real estate term loan and the Pathward asset-based line of credit in place, the company finds themselves with ample access to working capital and two supportive lenders to assist them in their growth efforts. The performance improvement initiatives instituted earlier this year are beginning to pay off, and the business is well positioned for a strong 2024.