$125 million
Working Capital/Other
Representative Deals
- $125 millionWorking Capital/Other
Titanium and other metals distributor
Headquartered in Highlands Ranch, Colorado, VSMPO-Tirus US, Inc. was incorporated in 2000, and distributes primarily out of its two warehouses, Leetsdale, PA and Ontario, CA, selling to major aerospace, industrial and medical companies. The parent company, VSMPO-AVISMA Corporation is headquartered in the Sverdlovsk region of Russia. The parent company is vertically integrated, from the refining of titanium bearing ores to producing elemental titanium, through the melting, forging and rolling operations used to manufacture mill products, and further into open and closed die forging operations to produce shaped parts, principally for the aerospace market.
VSMPO was looking for a financing solution to include a U.S. revolver. Bank of America Business Capital provided a $125 million revolving credit facility to support ongoing working capital needs and growth opportunities. Bank of America Merrill Lynch also is providing letters of credit.
- £130 millionWorking capital/Growth£130 millionWorking capital/Growth
Steel manufacturer and reinforcement products supplier
Celsa Steel (UK) is the largest manufacturer of steel reinforcement in the UK, and one of the largest producers of other long steel products. From their facilities in Cardiff, Celsa Steel UK produces around 1.2 million tonnes of steel annually, all from recycled scrap metal.
"Since 2003, Bank of America has been working with Celsa UK supporting our continuous growth. Today, in any industry but specifically in the steel sector, it is essential to have the sufficient facilities to keep growing the business, as well as to help to cope with raw material price volatility and its impact on the working capital. By signing the increased facility we have made this possible and have taken a new step towards the fulfilment of our business plan." commented Raimon Trias, Finance Director of Celsa UK Group.
Lee Masters, Vice President at Bank of America Business Capital, added "Bank of America Business Capital is delighted to arrange and agent this £130 million ABL facility. We are also proud to continue to support a British manufacturing business during these difficult economic times and to provide the necessary funding to meet our clients' working capital needs. This transaction clearly demonstrates the strength of our syndication offering and we're delighted to welcome two new partners into our bank group." Bank of America Merrill Lynch also is providing letters of credit and foreign exchange services.
- $80 millionRefinance$80 millionRefinance
The leader in blue-collar staffing
Headquartered in Tacoma, Washington, TrueBlue, Inc. is the leading provider of temporary blue-collar staffing in the U.S., Canada and Puerto Rico. With over 700 branches, the company serves approximately 175,000 small to mid-sized businesses in the services, retail, wholesale, manufacturing, transportation, and construction industries.
TrueBlue entered into an Amended and Restated Credit Agreement with Bank of America Business Capital assuming the Administrative Agent's title. Bank of America Business Capital provided an $80 million revolving credit facility to provide for ongoing working capital. Bank of America Merrill Lynch also is providing letters of credit and treasury management products and services.
Overview
Bank of America Business Capital provides asset-based credit facilities of $10 million or more throughout the United States, Canada and Europe for manufacturers, wholesalers, distributors and service businesses.
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Planning an acquisition?
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In a turnaround situation?
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In need of increased working capital?
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Outgrown your current lender?
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Need the ultimate in flexible financing solutions?
If any of the above applies to your organization, then Bank of America Business Capital has a solution for you.
As one of the leading senior secured lending organizations in the world, with one of the largest asset-based portfolios, Bank of America Business Capital is positioned to finance companies in a broad array of industries.
Structure
An asset-based loan is typically structured as a revolving line of credit without a scheduled repayment and on an interest-only basis. The lender advances funds based on a percentage of the accounts receivable (normally 70-85 percent) and inventory (0-60 percent) and, when such assets convert to cash, the advances are repaid accordingly. Ineligible collateral is not included in the borrowing base. Ineligible accounts receivables include past due receivables, inter‑company receivables, and other lower quality receivables. Ineligible inventory includes work‑in‑process, packaging materials, or inventory at a sub-contractor.
Revolver
A revolver allows a borrower to borrow, repay and reborrow as needed over the life of the loan facility. Bank of America Business Capital provides revolvers of $10 million or more.
Term Loan
One component of senior debt is a term loan. This is typically an asset-based loan that is based on a certain percentage of the orderly liquidation value of the machinery and equipment and the appraised fair market value of the land and buildings.
Asset-based loans against equipment and real estate are often made in the form of term loans that include regular periodic payments of both principal and interest in order to retire the debt at a fixed maturity date. Asset-based loans using real estate as collateral have longer maturities than equipment loans because of the generally shorter economic life expectancy of equipment.
Typical Uses
Asset-based loans are secured by a wide variety of assets. Businesses can borrow money, using collateral such as accounts receivables and inventory or fixed assets such as plant, property and equipment. Asset-based loans also can include equipment loans and real estate mortgages.
Companies in an array of industries and at varying stages of their lifecycles use asset-based loans for a multitude of reasons including mergers and acquisitions, debt refinancing, capital expenditures, working capital, leverage buyouts and even employee stock ownership programs. Asset-based loans offer flexible financing solutions for the following uses:
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Working Capital: The assets available to apply to a business' operations are considered working capital assets. At times, working capital loans are needed to bridge financial gaps during the lifecycle of a business. Working capital loans can be secured by a variety of asset types, including accounts receivable, inventory, equipment, and/or real estate.
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Acquisition: To grow a business, a company may look to acquire a strategic partner or even a competitor. Asset-based financing is often an efficient means to obtain funding for business acquisitions.
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Turnaround Financing: Turnaround financing is often used by under-performing businesses that are not achieving their full potential. In some cases, it is used for businesses that are either insolvent or on their way to becoming insolvent. Asset-based lenders are accustomed to the bankruptcy process and asset-based financing is ideal for turnarounds because of its flexibility.
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Capital Expenditures: Capital expenditure is the money spent to acquire and/or upgrade physical assets such as buildings and machinery. Capital expenditure is also commonly referred to as capital spending or capital expense.
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Debtor-in-Possession (DIP) Financing: Debtor-in-possession (DIP) refers to a company that has filed for protection under Chapter XI of the Federal Bankruptcy Code and has been permitted by the bankruptcy court to continue its operations to implement a formal reorganization. A DIP company can still obtain loans, but only with bankruptcy court approval. Asset-based lenders also provide exit financing or confirmation financing to companies coming out of bankruptcy.
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Growth: Typically, as a company grows so does its need for financing. Also, as a company's collateral grows, its assets can strengthen its ability to borrow. An experienced and creative asset-based lender can assemble a credit facility that can scale to grow with a company.
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Recapitalization: Recapitalization is the process of fundamentally revising a company's capital structure. A company typically might recapitalize due to bankruptcy or replacing debt securities with equity in order to reduce the company's ongoing interest obligation. A leveraged recapitalization typically achieves just the opposite—by taking on a material amount of debt, the company increases its ongoing interest obligation but is able to pay its shareholders a special dividend. Bank of America Business Capital has extensive experience guiding businesses through the stages of recapitalization.
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Refinancing/Restructuring: When a company enters or exits a growth stage, refinancing or restructured financing may be key to creating a capital structure that better meets the needs of the company. This type of financing is often used for market expansion, completing an acquisition, restructuring operations, or following a successful corporate turnaround.
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Buyout: A buyout is the purchase of a controlling percentage of a company's stock. In a leveraged buyout (LBO), the acquiring company uses the minimum amount of equity to purchase the target company. The target company's assets are used as collateral for debt, and its cash flow is used to retire debt accrued by the buyer to acquire the company. A management buyout (MBO) is an LBO led by the existing management of a company. Most LBOs are also MBOs.
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Leveraged ESOP (Employee Stock Ownership Plan): A leveraged ESOP is one of many corporate finance alternatives that provide significant tax incentives to both business owners (potential deferral of capital gains) and ESOP Companies (potential exemption from federal income taxes). ESOPs can be used not only to finance stock purchases from existing shareholders, but also to facilitate corporate transactions such as management buyouts, acquisitions and divestitures.
Benefits
There are a number of advantages to using asset-based financing:
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Generates more liquidity — for a company within a cyclical industry, borrowing money against its assets may result in a more predictable borrowing availability. On the other hand, if a company borrows against a multiple of earnings (EBITDA) and the earnings decline, the borrower will find itself being able to borrow less.
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Has built-in disciplines — because the borrowing availability is based on advance rates against current accounts receivable, an ABL structure motivates borrowers to collect their receivables more promptly. Similarly, because work-in-process generally is ineligible collateral, borrowers are motivated to increase the efficiency of their production process to increase liquidity.
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Fewer financial covenants, including higher balance sheet leverage — typically, an asset-based loan requires fewer financial covenants because of its collateral orientation. The most common covenants are debt service coverage and net worth.
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Lender patience — because a lender has collateral to protect its loan, the lender may be willing to give the borrower more time to turn around a company that may be having financial difficulties.
Client Web Site
abl.bankofamerica.com allows Bank of America Business Capital clients to access and monitor their account information quickly and easily over the Internet. With my.bofabusinesscapital.com, clients can log on for account information anytime, in a secure, private environment. Now clients can view online:
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Loan status/availability — Check your availability on a daily basis
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Loan ledgers — View loan transactions like wire transfers and deposits or look up transaction history
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Month-end interest statements — Download statements right into your own spreadsheet software
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Prime and LIBOR interest rates — Check rates easily
In addition, clients have the ability to submit online:
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Borrowing certificates/borrowing base — Report collateral changes and borrowing base
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Advance requests — Expedite your requests online
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LIBOR requests — View your current rate's maturity date and amount or request LIBOR online
Clients can still rely on the expertise and personal attention of Bank of America Business Capital's Loan Servicing Administrators. abl.bankofamerica.com simply expands the service options to better meet client needs.
Perspective
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Business Capital Asset-Based Financing Solutions (Jan./Feb. 2012)
Find out about some of the financing solutions that Bank of America Business Capital recently provided, such as the £130 million to steel manufacturer and reinforcement products supplier Celsa Steel (UK) Limited and $125 million to titanium and other metals distributor VSMPO-Tirus US, Inc. Visit the Deals & Transactions section of our web site where many of our client financing solutions are featured.
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News Media
- The news media may arrange an interview, obtain a byline article or request additional asset‑based lending information by contacting:
Jefferson George
Bank of America
1.980.683.4798
Bank of America Newsroom