Quantum Capital secures $7.494 million in credit facilities for a manufacturing client
Location: Ontario
Facilities: Operating Line, Term Loan, Capex Loan
Total Amount: $7,494,000
Amortization: 10 years
Lender: Bank lender
Project: Refinance existing debt, support ongoing working capital needs, funding for future capex requirements
Primary goals achieved: Lower cost of funds
We were approached by an established manufacturing business in Ontario with 17 years of operating history and a steady record of growth. Over time, the company had taken on financing from various lenders to keep up with demand. Each facility made sense when it was put in place. Together, though, they left the business with a higher cost of funds than its performance justified, and with payments and covenants spread across more than one lender.
Management wanted three things: lower borrowing costs, enough working capital to run the business without strain, and a clear plan for funding equipment and capital projects over the next few years. They didn't want to go back to the market every time a new need came up.
We started by rebuilding the company's credit story from the ground up. The underwriting package set out the business's financial performance, cash flow coverage and growth plans in the format bank credit teams expect.
We submitted the opportunity through our commercial banking channels and secured a term sheet to roll many facilities into fewer, less complicated facilities under one roof:
Term Loan: The term loan refinances the existing debt at bank pricing, 75 basis points below the client's previous blended rate. Over the seven-year amortization, that saves an estimated $300,000 in interest and frees up monthly cash flow to reinvest in the business.
Operating line: A revolving operating line covers day-to-day needs like payroll, inventory and receivables. The company draws only what it needs and pays interest only on what it uses.
Capex loan: A committed capex facility is in place for planned equipment and capital spending. The client can move ahead on those projects when they're ready, without starting a new application.
The result is one banking relationship, one set of covenants, and a structure that fits how the business actually operates.