For turnaround advisors, there are several scenarios where ABL provides their clients the necessary flexibility during periods of transition. The right asset-based lending partner can help advisors proactively secure support before true distress occurs. GBC commonly works with turnaround advisors who need lenders with deep turnaround expertise, and an ability to be nimble and fast.
To give a first-hand look inside a turnaround partnership — including what it looks like to work directly with Gibraltar — we sat down with David Kebrdle, managing partner at Chikol Equities, to share his expertise.
Chikol Equities works with secured creditors, private equity groups and business owners to assist with revenue growth strategies, credits in distress, on site due-diligence work and acquisition rollup implementation. The company leverages lending relationships that empower long lasting positive change so that clients can continue to achieve financial and operational success even in times of economic and business change.
Tell us how you came to work with Gibraltar.
Chikol is engaged by private equity groups about 50% of the time. We were contacted by a private equity group with a portfolio investment in distress. After learning that Gibraltar was their secured lender, we reached out to the credit team to introduce ourselves, our role and our proposed path forward. The Gibraltar team was responsive and thoughtful as we worked through the turnaround. The company was eventually sold to a competitor, paying off Gibraltar and the company today remains successful.
What is your current relationship with Gibraltar?
We’ve had many opportunities since that first meeting to work with Gibraltar, both as a resource to our clients and as the secured lender in place for a credit in distress. One such opportunity was a recent plant consolidation project commissioned by one of our clients. Realizing that Gibraltar was their asset-based lender, we kept the team in the loop as we conducted a buildout of inventory, collected on accounts receivable and transitioned key technologies, equipment and inventory. All during the process, the Gibraltar team supported the needed advances, while protecting their position. The surviving plant consolidation plan was completed, earnings moved positive, and we secured a new lender as planned. The company was eventually sold to a public entity and the remaining stakeholders were pleased.
When and why should a borrower or advisor consider asset-based lending?
As borrowers review and sometimes become restricted by traditional lending covenants (Fixed Charge, Min Net Worth) and financial reporting requirements in their loan documents, it may be time to talk to us about an asset-based loan. For turnaround advisors evaluating their financing options, choosing to partner with a non-traditional asset-based lender and a traditional bank lender doesn’t have to be a mutually exclusive decision. Asset-based lending often helps transition clients back to traditional financing sources when they can thrive on their own.
What should borrowers and advisors look for in an asset-based lending partner?
First, you should make sure there is a fit between you and your lender. Ask yourself: Do they understand your business cycles?
Second you should choose a lender that fits your cost of funds versus just having flexibility and filing demands.
Lastly, you should choose a group that others have been successful with which ensures they don’t leave you at the altar and close on their commitments.
What are the most attractive aspects of working with GBC in particular – what do you see as their unique strengths as a financing partner?
The Gibraltar team follows through and doesn’t leave you hanging. They always try to understand the business and its differences and if you are open with them – they will support you to the best of their ability.