Gibraltar Provides $20MM to Sponsor-Backed Seasonal Business
Gibraltar’s experience working with financial sponsors on a multitude of special situations proved critical in this recent financing partnership.
Gibraltar prides itself on its ability to provide companies and their private equity sponsors with flexible financing and maximum liquidity, based on our ability to understand each business’ special situation. This enabled us recently to provide Texas-based Easy Gardener Products, Inc, a $20 million credit facility to help with a restructuring.
Easy Gardener designs, manufactures, and sells a broad range of consumer lawn and garden products. It sells its products under several well-known patented and trademark brands such as WeedBlock, Jobe’s, Emerald Edge, Landmaster, Ross, and Jobe’s Organics. Its customer base includes longstanding relationships over a 20- to 30-year period with a robust network of large national home improvement and mass merchant retailers as well as local hardware stores and independent garden centers and nurseries.
Financial Sponsor Seeks Patient Capital
Easy Gardener is owned by Centre Lane Partners, a New York based private investment firm that invests in underperforming companies with revenues generally between $20 and $500 million. Guiding Easy Gardener through a restructuring designed to strengthen its foundation and take it to new levels of growth required strategic financing. When the company needed access to flexible, patient capital from the less restrictive non-bank environment, Gibraltar was approached to help with an asset-based financing solution.
Gibraltar was chosen for its history of successful financing support of sponsor-backed companies. Centre Lane partners was also impressed with the accessibility of senior decision makers at Gibraltar. “One of the reasons we’ve chosen Gibraltar as a financing partner is the accessibility of the credit committee,” said Centre Lane Partners Managing Partner and Co-Founder, Kenneth Lau. “During the financing process, we’ve been able to discuss our concerns directly with all members of the credit committee. They spent significant time and resources to fully understand the company’s financial and operational restructuring.”
Solution Involves Creative Use of Non-Standard Collateral
Another notable aspect of this transaction is the fact that Gibraltar’s solution involved generating more liquidity through a very flexible approach to the use of the company’s collateral.
It is typical for an asset-based borrowing base formula to include Accounts Receivable and Inventory. In this case, A/R was expanded to include Canadian A/R and special dating A/R — in which special credit terms are offered to retailers to encourage them to order and accept delivery of seasonal items well ahead of the peak sales period. And, to provide enough structural flexibility to meet the needs of this very seasonal business, Gibraltar offered higher advances against inventory for both high and low season, plus advances against excess and in-transit inventory, and inventory located in Canada.
These special inclusions and conditions resulted in a financing solution that could generate adequate liquidity to help ownership and management effectuate a restructuring of the business for future success.