Platform
Bank able to iterate capital structure options on the CE platform providing term sheets instantly online.
New relationship for the bank
Facilitating a High-Value Sponsor Acquisition
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- Bank
- Texas based commercial bank
- Borrower
- Industrial products company
- Senior loan financing
- $11,000,000
- Collateral coverage
- $2,400,000
Issued by UMB Bank
Situation overview
- Sponsor acquisition rollup of several industrial product companies
- Additional acquisitions scheduled to be closed and financed in near term
- Sponsor and Broker had been unable to secure bank financing to close deal and non-bank financing prohibitively expensive
- CollateralEdge™ worked with Broker to evaluate and referred the transaction to our customer bank with a preliminary coverage quote for the underwriting
Underwriting concerns
- 01
New relationship for the bank
- 02
Risk exposure for future acquisitions
- 03
Time-sensitive transaction
The bank needed to get comfortable with the current financing needs of this new sponsor and have a plan that didn’t put them at risk for the pace of future acquisitions. The bank also needed to execute quickly as there was risk in maintaining the seller LOI in place.
Solution
Collateral
Letter of credit issued by UMB Bank to our client bank at deal close. CE also has ability to increase coverage as needed.
Bank Control
Coverage paid up front through closing proceeds, allowing bank total control of loan and customer relationship.
Benefits
The CollateralEdge value proposition is designed to help banks win commercial loans while mitigating risk.
CollateralEdge coverage gave the bank the comfort to allow the Sponsor to close the current acquisitions and put in a longer-term financing structure in 90-120 days.
CollateralEdge involvement and relationships facilitated the transaction and provided a much better alternative to the expensive non-bank market.
The bank established a new banking relationship with the Sponsor which includes significant deposits and future growth opportunities in this and future deals.