- $30 millionWorking Capital
Manufacturer of metal components and systems
Bank of America Business Capital has provided a $30 million asset-based loan to JD Norman Industries, Inc. to refinance existing debt and support the purchase of two subsidiaries of Federal-Mogul Corporation. The business units include a connecting rod machining operation in Windsor, Ontario and a camshaft foundry in Lydney, England.
JD Norman Industries, Inc. is a diversified manufacturer of metal components and systems with operations in the United States, Mexico, Canada, and the United Kingdom. JD Norman is a leader in the manufacturing of highly engineered product including formed, machined and cast metals. The company serves major original equipment manufacturers of automotive, industrial and transportation products.
- $20 millionAcquisition
Provider of interactive media and connectivity services
Bank of America Business Capital has provided a $20 million senior secured asset-based loan for LodgeNet Interactive Corporation.
LodgeNet Interactive Corporation is a leading provider of interactive media and connectivity services. The company was acquired by a syndicate of investors led by Colony Capital LLC, a global real estate investment firm and one of the largest investors in hospitality assets.
As an integral part of this strategic acquisition, LodgeNet and Colony Capital turned to Bank of America Merrill Lynch and its Business Capital group for financing assistance. Funds will be used for ongoing working capital needs and to help finance strategic growth opportunities for the company.
- £110 millionWorking Capital
Manufacturer of precision components, alloys and metals
Doncasters Group Ltd. is a leading international engineering group that manufactures precision components and assemblies for the aerospace, industrial gas turbines, specialist automotive, petrochemical, construction, industrial, transportation and recreation markets. The group excels in working with alloys and metals that are difficult to shape and form.
Doncasters operates from sites in the U.K., Continental Europe, U.S., China and Mexico. The client base is genuinely global and comprises most of the industry leaders in its relevant areas of activity. The group currently has about 5,000 employees worldwide Bank of America Business Capital closed a £110 million asset-based loan for Doncasters Group Ltd expanding its presence in the United Kingdom and Europe.
Bank of America Business Capital has expanded its presence in the UK and Europe by closing a £110 million asset-based loan for Doncasters Group Ltd. Bank of America Business Capital acted as sole arranger and joint bookrunner (left) on the asset based deal. In addition, Bank of America Merrill Lynch acted as joint bookrunner on an $876 million equivalent 7-year first lien term loan and $290 million 7.5-year second lien term loan. Contingent hedging solutions were also structured as part of this transaction.
- $45 millionAcquisition
Safariland is a leading manufacturer of protective products for local police and other protective agencies worldwide. Products include hard and soft body armor, holsters, duty gear, protective equipment and less lethal protective alternatives. Safariland sells its products under a broad spectrum of brands and maintains premier positions in its core product lines in the U.S. Products are sold to users through approximately 300 dealers, distributors and wholesalers. Headquartered in Jacksonville, Fla., the company has approximately 1,700 employees in five facilities across North America.
Bank of America Business Capital has provided financing for Safariland, LLC through a $45 million, asset-based revolving credit facility. The credit facility will support the acquisition by Kanders and Company, Inc.
- $50 millionRefinance
Supplier of stainless steel and specialty steel products
Atlas Steels is the largest supplier of stainless steel and specialty steel products in Australia and New Zealand. Atlas has 17 customer service sites, including a sheet and coil processing plant and a tubular mill where stainless steel and precision carbon tubular products are manufactured. In order to execute a turnaround plan, the company needed to secure flexible capital tailored to their specific goals and objectives.
Bank of America Business Capital has provided an asset-based credit facility for working capital needs. The facility also allows Atlas to issue letters of credit and other trade products. In addition, the bank is coordinating loan and cash management accounts and foreign exchange.
- #1 U.S. Bookrunner of asset-based loans for 1H 2013Thomson Reuters , 1H, 2013
- #1 U.S. Bookrunner of asset-based loans for the year 2012Thomson Reuters, 2012
- #2 Bookrunner of syndicated loans to U.S. Large Middle MarketThomson Reuters, Q1, 2012
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.
Planning an acquisition?
In a turnaround situation?
In need of increased working capital?
Outgrown your current lender?
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.
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.
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
There are a number of advantages to using asset-based financing:
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.
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.
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.
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:
Loan status/availability — Check your availability on a daily basis
Loan ledgers — View loan transactions like wire transfers and deposits or look up transaction history
Month-end interest statements — Download statements right into your own spreadsheet software
Prime and LIBOR interest rates — Check rates easily
In addition, clients have the ability to submit online:
Borrowing certificates/borrowing base — Report collateral changes and borrowing base
Advance requests — Expedite your requests online
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.
Frequently Asked Questions about Asset-Based Lending
Asset-based lending offers a powerful financing solution for midsized and larger companies that seek to maximize the value of their assets, achieve greater liquidity, and pursue new growth opportunities.Download PDF (135.8 KB) More
Bank of America Business Capital President Jeff McLane Talks With The Deal
Bank of America Business Capital President Jeff McLane sat with Jonathan Marino, senior editor at The Deal magazine, to discuss manufacturing M&A and McLane's outlook on private equity trends, the credit market and why he's optimistic about U.S. companies. Following are highlights of the discussion.Download PDF (872.6 KB) More
The Race for Overseas Growth
As much as 85% of the GDP growth of multinational companies is likely to come from outside the U.S. over the next several years. But as companies dive into fast-growing international markets, organizational structures are sometimes slow to follow. In the areas of risk management, cash and liquidity management, and access to capital, new kinds of expertise are imperative to successful overseas expansion. A Bank of America Merrill Lynch panel shares their overseas outlook and the strategies needed for success.More
Auto Supply Industry Rebounds, But Who Will Fund The Growth?
There were worries earlier this year that parts suppliers would not be able to retool and restart idled plants fast enough to meet the rising demand, but our view of the industry is that suppliers have met the first wave of the ramp-up, primarily because the rise has been steady rather than spiked. Another concern has risen, however: How will suppliers meet the demands of the wave of new auto models expected to be introduced within the next four years? 2008 to 2011, the dog that saw GM and Chrysler enter bankruptcy wagged the tail so hard it lost an estimated 57 parts makers and 20 percent of its work force, or 100,000 people.Download PDF (487.3 KB) More
Atlas Steels Financing Opens Door to More Opportunities
Bank of America Business Capital closed a A$50-million asset-based loan to allow Atlas Steels to expand its presence in the Australia/New Zealand market. Atlas Steels is the largest stainless and specialty steel manufacturer and supplier in the region.Download PDF (587.8 KB) More
Asset-Based Lending in Europe Today
"Bespoke ABL Financing" was a common theme at CFA's 7th Annual International Lending Conference at Bank of America Merrill Lynch in London in May 2013. This article quotes many of the conference leaders, panelists and organizers who discussed recent developments in cross-border lending and the outlook for European asset-based lending.Download PDF (1 MB) More
Finding Financing in Europe (BABC Video)
The U.K. is the "most favorable country in Europe for financing purposes, primarily because of its long history, precedents in the court system and the way that the commercial code is structured," explains Bank of America Merrill Lynch's Alister Bazaz.More
Committing to China (BABC Video)
The Jordan Co. has been investing in China since the 1990s and has closed 26 deals there. Jordan's senior vice president Andrew Rice shared some of the lessons the firm has learned in this video conversation with editor-in-chief Mary Kathleen Flynn, which was shot at a recent conference on cross-border M&A hosted by Mergers & Acquisitions and Bank of America Merrill Lynch.More
Cross-Border Lending: Sea of Change (BABC Video)
Years ago, "you could always tell the cross border lending expert at a bank because that was the person who could say no in 50 different languages," says Richard Kohn of Goldberg Kohn Ltd. To learn more about lending changes driven by the globalization of the U.S. middle market.More
European Lending: What Happens When Things Go Wrong? (BABC Video)
Lenders looking to do business in Europe should think about, "what happens if it all goes wrong?" explains Norton Rose LLP's Michael Black. To learn more about where secured lenders are treated favorably or less favorably during a bankruptcy case, view this video conversation.More
International Transformation: Unlocking Value & Executing Abroad
Corporate and private-equity dealmakers increasingly recognize that international transactions will be a crucial part of any company's growth strategy. But the strategies and practices that are successful domestically don't always translate overseas — a lesson that middle-market companies need to learn quickly, or risk losses on their new ventures.Download PDF (3 MB) More
- Frequently Asked Questions about Asset-Based Lending Article
- Bank of America Business Capital President Jeff McLane Talks With The Deal Article
- The Race for Overseas Growth Article
- Auto Supply Industry Rebounds, But Who Will Fund The Growth? White Paper
- Atlas Steels Financing Opens Door to More Opportunities Case Study
- Asset-Based Lending in Europe Today Article
- Finding Financing in Europe (BABC Video) Product Video
- Committing to China (BABC Video) Product Video
- Cross-Border Lending: Sea of Change (BABC Video) Product Video
- European Lending: What Happens When Things Go Wrong? (BABC Video) Product Video
- International Transformation: Unlocking Value & Executing Abroad CapitalEyes