Business Capital Structures & Secures $5MM Financing for AG Contract Labor Services Provider
“A big thank-you to the BizCap Team, a true partner! Their expertise is clear and, what I have appreciated the most, is their willingness to mentor and guide us through the process from beginning to end. Due to the complexity and tight deadlines of the deal, we definitely would not have been able to close the deal without Biz Cap. Reed Upson was stellar, supporting key elements of the deal on our behalf when my plate was full.” — Julie Reynosa, CFO, Rancho Harvest
Our Client, Rancho Harvest Inc. (“RHI”), is one of the largest labor contracting providers for farmers, food shippers and processors serving the agricultural communities of California and Arizona. The Company hires and deploys over 13,000 laborers making it a leader in the Farm Labor Contractor “FLC” industry, employing and training both domestic and H2A workers providing a wide scope of services, equipment and an experienced, insured labor force for efficient and cost effective harvesting.
The industry is incredibly complex, in terms of hiring, managing and paying a temporary labor workforce and navigating government regulations, workers comp, and other HR initiatives. One of the biggest unknown costs on an annual basis was workers’ compensation claims, which RHI had historically provided a self-insurance program to facilitate and required additional collateral and funding to support. In 2013, RHI decided to transition to a “pay as you go” method for workers comp, in order to alleviate the uncertainty of cost from year to year, however was still required to pledge collateral for the older self-insurance program until all claims were settled. This expense, combined with the cost of a one-time lawsuit settlement, caused a strain on working capital. Because of the complicated business model, seasonality and customer concentration, obtaining new financing to facilitate existing working capital, as well as growth, was challenging.
Business Capital was able to understand the complexity and challenges of the general industry and business specifics to secure intelligent and cost effective financing for the client. The new credit facility leveraged the company’s working capital and fixed assets in a more intelligent manner to provide the necessary liquidity for funding day-to-day operations, pledging collateral for the old self-insurance program, and support future plans for growth.