Ravinia Capital closed a $25-million revolving line of credit less than 75 days following initial receipt of the proposal letter.
The Lake Geneva, Wisconsin-based Primex Family of Companies (PFoC), a three-division-strong global distributor of own-branded-and-designed weather instruments, environmental sensors, notification boards, synchronized clocks, companion software solutions, and clock craft kits, approached Ravinia Capital to refinance its $16-million line of credit and secure additional availability if possible.
Following a difficult year of global supply-chain-disruption-related issues affecting all three of its member companies, the PFoC’s longtime lender expressed a sudden desire to exit, leaving the group in a difficult, time-sensitive situation and without a clear path forward.
Overcoming A New Kind of “Timing Issue” for the Company
As is typical of many manufacturers and distributors of consumer products, the PFoC businesses are predictably seasonal in nature, netting most of their earnings in the fourth quarter. And seeing as the logistical challenges of the previous year were firmly behind them and several highly anticipated new product offerings had since been brought to market, the company’s management teams were confident that the next holiday season would see a return to historical levels of profitability.
However, with the forbearance term under the legacy loan agreement expiring long before any results from this period would become available, convincing lenders to buy into management’s expectations and the projections that supported them became the most salient obstacle to achieving a timely and successful refinance.
Building Confidence in Future Performance
Once engaged, the Ravinia team quickly surmised that the availability, organization, and presentation of relevant information from the PFoC in support of its forecasted financials would be the largest deciding factor in determining whether prospective lenders would be able to grow comfortable enough with the group’s situation to provide funding prior to the end of the forbearance period.
Accordingly, Ravinia worked diligently to produce a thoroughly detailed, sixty-page informational memorandum, as well as comprehensively populate a well-ordered virtual data room with supporting primary documents, both of which were later cited by multiple parties as instrumental in facilitating their full evaluation of this opportunity within the circumstantially limited diligence period.
Structuring a Competitive Proposal Process to Achieve Success
Understanding the immovability of certain critical deadlines set by the bank, Ravinia devised and enforced a highly structured process for soliciting loan proposals from lenders which placed a firm limit on how much time each was given to review the available information and ask questions before being required to either submit a term sheet for consideration or exit the process altogether.
By virtue of increasing the total number of options that the PFoC had available to choose from before needing to make a final decision about how to proceed, this approach also fostered an element of competition, incentivizing each interested party to offer the best possible terms in order to maximize their chances of standing out within the crowded field of contenders.
Proceeding with Speed and Certainty Toward Closing
After helping the PFoC’s management identify Edge Capital’s offer as the highest and best of those obtained, Ravinia remained intimately involved in the process as an advisor to its client, as well as an intermediary between parties, working to maintain momentum and ensure timely completion of all items on this chosen lender’s closing checklist. As a result of these efforts, the companies were able to close on a $25-million revolving line of credit less than 75 days following the initial receipt of the associated proposal letter.
In an outcome that greatly exceeded all expectations, the refinance ultimately increased committed funding to the borrower group by more than 50% over its previous facility, and in doing so, provided an additional $9 million for use on planned expansion into additional markets alongside further significant investment into research & development of new technologies.
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