When an independent children’s book publisher needed to find a lender to support their turnaround plan, it sought a partner that understood the publishing industry and would provide the working capital support to make timely royalty payments and fund payroll, even when key customer payments were delayed due to extended payment terms. That partner was Republic Business Credit, which extended a $1 million factoring facility to the company.
The Illinois-based company, which has been in business for more than 100 years, publishes middle grade fiction, picture books and young adult novels. DEI is at the core of this company’s mission, and it is proud to publish books that promote empathy, inclusion and personal responsibility in the next generation. The company’s customers include the trade, education and library industries.
“We are grateful to have Republic’s financial support for the seasonal liquidity needs in our industry,” said, its CEO. “This facility will help us fill crucial gaps in cashflow to not only stabilize payment cycles, but also reach goals we are confident we can achieve with this funding.”
While the company was historically profitable, it began facing industry-wide difficulties that led to a decline in revenue. To compensate for the unexpected shift in profitability, the company successfully sold one of its business lines. However, after the sale, its previous bank was no longer willing to support the company.
The company was still required to make significant, semi-annual royalty payments, even with payments coming in slowly from key customers. The company had utilized the expertise of certified turnaround and restructuring consultant, KFK Advisors, to develop its turnaround and restructuring plan. KFK’s managing partner and established turnaround professional, Kevin Kelly, referred the company to Republic.
Republic’s funding provided the liquidity solution for the royalty payments, in addition to working capital funding for the company as they are paid up to 120 days after sale by select customers. Republic also provided an 85% advance rate. This funding solution ultimately allows the company to focus on its business and will support its turnaround plan in 2023 and 2024.
“We are confident our recourse factoring facility will help this business by providing liquidity to manage their operations,” said Republic’s SVP, William Kemp. “We are happy to help an independently-operated business in the Midwest that provides important educational materials to so many key age groups.”
“Turnaround consultants, Kevin in particular, allow us to partner with companies that we might not otherwise be able to support,” said Robert Meyers, Republic’s President. He added, “Kevin Kelly is a great advocate for his clients, understands their businesses and tends to help across their various financial, accounting, operational and people development needs.”