The Hedaya Capital Group provided a $3.0 million letter of credit facility to a well-established consumer products brand selling direct to consumers through their own website. The company sells premium-quality, extra-soft pajamas for women, men, children and babies, and even matching pajamas for pet lovers to keep their dogs and cats warm and cozy.
An investment firm quickly acquired the fast-growing business, planning to arrange permanent financing after the business stabilized. Securing new financing with a traditional lender and ensuring the release of any third-party liens for outstanding letters of credit can be an onerous task and can stall an M&A process. The investment firm turned to The Hedaya Capital Group, a firm with deep expertise in trade finance and experience working with buyers and sellers to remove barriers to funding.
As the Company’s peak holiday selling season approached with an expected surge in customer orders, the investment firm turned to The Hedaya Capital Group to provide financial assurance to the Company’s overseas suppliers. The retail value of the orders backed by the letters of credit was approximately $10 million, a sizeable portion of the company’s annual sales. The manufacturers were good partners in the sleepwear industry, with numerous production lines that could guarantee a stable inventory supply and delivery times at a reasonable price.
Hedaya’s letter of credit financing guaranteed timely payment for the suppliers and gave the Company and its new owners peace of mind that they would have sufficient inventory to meet the holiday rush. By issuing letters of credit, the company didn't have to make cash deposits to their suppliers and was also assured that the product would be received on time and according to specifications.
“With Hedaya, we have a partner dedicated to helping us grow our business in a global market. Traditional lenders can take a long time; Hedaya quickly provided letters of credit to all our overseas vendors, enabling us to secure the delivery dates needed before the holiday season.” – Investment Firm Founder