When a portfolio company of a California-based private equity firm sought to refinance and upsize its existing asset-based lending facility, the company partnered with Republic Business Credit. Republic provided a scalable, flexible and growth-orientated $5 million credit facility with full availability on retail inventory, wholesale inventory, merchant accounts and direct to consumer proceeds.
The company is a national confectionary manufacturer that goes to market through a diverse omnichannel approach. The company interacts with customers across its large retail, ecommerce, direct to consumer and wholesale footprints. The company positions itself as a market leader in a very high margin business with seasonal upticks around holidays such as Easter, Valentine’s Day, Mother’s Day, Halloween and others. While many seasonal businesses have slower periods, the company’s retail strategy enables it to succeed during the non-peak season due to high traffic locations.
A California-based private equity firm acquired the confectioner and sought a new lending partner to complement its experienced management team and growth strategy. The company sought additional support for its 50-plus retail storefronts and more investment in ecommerce opportunities as it emerged from the pandemic.
“Shortly after acquiring the company, we naturally needed to refinance our current balance sheet with better senior debt terms but more importantly, identify a partner who would execute our strategy together,” the managing partner of the private equity fund said.
While the pandemic presented a foot traffic challenge, the private equity firm and a strong management team at the confectioner leveraged the opportunity to strengthen storefront leases and expand into high growth areas around the country. The company provides world class products across its chocolate, bakery, candy and branded products, as well prepackaged offerings.
Republic provided a $5 million direct to consumer asset-based loan that increased availability across the confectioner’s warehouse and retail inventory locations. Republic worked alongside the private equity sponsor and management team to build covenants that addressed the seasonality of the business while recognizing the significant capital contributions already invested toward the company’s success.
Republic provided more availability, cheaper pricing and a better utilization-based fee structure in the hope of reducing borrowing costs during off season periods.
“As the private equity firm was evaluating new lending relationships, they were impressed with our valuable insight and experience in the consumer products industry,” said Robert Meyers, president of Republic Business Credit. “We took the time to truly understand their confectionary seasonal business model and structure a customized credit facility to meet their borrowing needs.”
Jason Carmona, Republic’s EVP, Western Regional Manager, said: “We are pleased to build on the successful turnaround story and provide the necessary credit facility to further expand the company’s retail, wholesale and ecommerce business strategy. We are excited to support the continued growth of the company in years ahead and to continue assisting with additional portfolio companies of the private equity group.”