TradeCap Partners, LLC announced a recently closed $250,000 Purchase Order funding relationship with a well-known model toy company located in Texas.
The company had enjoyed many years of strong operating results but past management hadn’t stayed abreast with new dynamics and consumer buying habits in the industry. With online sales continuously replacing more brick and mortar outlets, the company experienced a significant dip in sales. Turnover of SKUs slowed and inventory levels inflated. The private equity owners decided it was time to make some significant changes to management and the capital structure in order to navigate headwinds.
A factor was brought in to provide additional liquidity for the company but an added layer of capital was needed to purchase pre-sold inventory from overseas vendors. Many had moved to cash-on-delivery terms following ballooning of payables due them. New management wanted to make a push into certain retailers that had been neglected due to insufficient inventory mix that resulted in late deliveries. Additionally, the company had recently established a relationship with an online retailer that was increasingly representing a larger portion of sales.
Having worked with TradeCap before, the factor was confident in TradeCap’s ability to structure a solution for their client. An introduction was made and TradeCap established a purchase order finance facility accommodating the letter of credit and cash funding needs of vendors. TradeCap negotiated a subordination agreement with the private equity firm and utilized an already established intercreditor agreement with the factor so new management could execute their plan.
Bryan Ballowe, Managing Partner of TradeCap commented, “We are humbled by the level of support from the private equity and accounts receivable finance community. We know these partners are looking for a trusted, professional team to structure finance solutions for their portfolio companies and clients. We’re grateful they turn to TradeCap to provide that solution.”