Platform
Bank able to iterate capital structure options on the CE platform providing term sheets instantly online.
Uneven financial history
Securing a Strategic Partnership in Aerospace
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- Bank
- California based commercial bank
- Borrower
- Aerospace parts manufacturer
- Line of credit
- $3,500,000
- Collateral coverage
- $550,000
Issued by UMB Bank
Situation overview
- Leading manufacturer of precision-machined components for customers in aerospace and defense
- Over 60 years of operating experience
- Deal referred to the bank by CollateralEdge™
- Borrower seeking to refinance an existing term loan as well as “term out” an existing line of credit to free up cash/working capital to meet increased demand
- Collateral support needed on $3.5M line of credit
- PE / Sponsor backed
Underwriting concerns
- 01
Uneven financial history
- 02
Customer concentration
- 03
New relationship for the bank
Uneven post-Covid financial condition / performance doesn’t provide sufficient track record for the bank to be comfortable. Specialized, hard to value collateral in terms of the borrowing base. This is also a new relationship to the bank.
Solution
Collateral
Letter of credit issued by UMB Bank to our bank client at deal close. Good for duration of loan and 4 quarterly extensions.
Bank Control
Coverage paid up front by borrower at close, allowing total control of loan and customer relationship.
Benefits
The CollateralEdge value proposition is designed to align incentives with our bank customer to win a commercial loan.
CollateralEdge enabled the bank to appropriately address the gaps in underwriting in order to win a new commercial customer.
CollateralEdge allowed the bank to provide the required liquidity for re-financing without altering its internal borrowing base requirements.
Executing this commercial loan enabled the bank to secure the deposits as well as opportunities for future fee income.