King Trade Capital Closed a $2,000,000 Purchase Order Facility for a Texas Based Aviation Parts Supplier

Tuesday, June 28, 2016

King Trade Capital Assists Bank Client in Turnaround

King Trade Capital's Clint Stanton closed a $2,000,000 purchase order facility for a Texas based aviation parts supplier selling to domestic and foreign military and commercial customers.

Following a transition in ownership, the Client entered a new relationship with a regional bank that provided a line of credit against receivables and inventory. After closing the facility, the Client soon found themselves flying into major sales headwinds. The Company had over purchased parts inventory and not yet completed its restructuring efforts to reduce the G&A expenses of the business. This placed a strain on cash flow and vendor relationships, resulting in suppliers moving from open account terms to cash in advance on new inventory purchases. Additionally, the collateral supporting the bank’s loan was now primarily weighted in slower moving inventory. The bank, interested in protecting its capital asked the Client to appoint a CFO advisory firm to help management navigate the storm.

With suppliers no longer offering terms and every dollar of available cash flow needed to support operations the advisor was in search of an additional source of liquidity. The advisor reached out to King Trade Capital.

In conjunction with the bank, King Trade Capital established a finance solution that provided the capital for the company to purchase inventory to fill their growing orders. An Inter-creditor Agreement was established with the bank allowing specific purchase orders to be carved out from the bank’s collateral pool. King Trade’s facility provides an added layer of capital to support cash-in-advance payments and credit enhancements to domestic suppliers for 100% of the inventory costs. The added capital allows the Company to utilize existing cash flow until restructuring efforts can be completed.

This Client represents another example of the value that King Trade Capital brings a senior lender when a client and their bank align with King Trade for an inventory or PO finance solution. King Trade will provide the capital to bridge the Company’s inventory needs and allow them to fulfill sales. The financing will provide the company the time to right size their overhead and rehabilitate vendor terms. The bank being proactive early in the process and seeking a finance solution with King Trade Capital has allowed their Client to become stronger and offered the bank the chance to maintain a customer relationship.

King Trade Capital is the country's oldest and largest independent provider of purchase order, trade and contract finance for small to middle-market companies in the U.S., UK and Canada. Since 1993 KTC has provided more than $2 billion of capital in over 350 public and private companies worldwide. www.kingtradecapital.com