Business Capital Structures and Secures $10MM Mezzanine Financing for California Rebar Fabricator and Installer
Our Client is the largest independent fabricator and installer of steel bar (rebar) products and post-tension cables in California and Nevada. Their product is used to reinforce concrete in both public and private sector projects, including: low to high-rise buildings, roads, bridges, mass transit, hotels, stadiums, schools, refinery and water treatment plants. Our Client has a labor pool of over 200 employees and four fabricating facilities in California, which are used to strategically source and store steel to be used for current and future projects.
As a result of being well managed and an increase in infrastructure and construction spending in California –especially the Bay and LA areas – substantially all of its projects in the last decade have been profitable leading to rapid growth. The fast pace of expansion created a need for additional liquidity to support operations and cash flow increases in a business with long invoice/payment cycles. Additionally, their main competitive advantage in the marketplace has been their ability to source steel from suppliers all over the U.S. and internationally, as opposed to competitors who are vertically integrated steel mills forced to rely on their own production and supply of steel. The price of steel has fluctuated dramatically over the last 12-24 months and the Management team saw a strategic opportunity to purchase materials at discounted prices, thereby improving overall job profitability.
Construction and related industries have historically been tough to finance, due to their cyclicality and low operating margins. Having worked successfully with multiple clients in the construction and contracting industries, Business Capital was able to understand the challenges of the cash flow cycle and underwrite the profitability of the Company’s existing pipeline as well as the future revenue and cash flow growth to be generated from this subordinated debt facility by taking advantage of market opportunities and favorable supplier pricing.