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Specialty Packaging Company

 

SITUATION:

 

Established in 2013, this United States subsidiary of a foreign parent company manufactures specialized packaging products for automotive and other manufacturing customers.  As the domestic entity continued to grow, they approached their local bank for a traditional line of credit.  With historical losses and significant negative equity (due to trade payables owed to the parent company), their bank was unable to approve the request. Wanting to build a relationship for the future, the banker introduced Magnolia Financial as an alternative interim solution.

 

SOLUTION:

 

With significant experience funding domestic subsidiaries, the Magnolia team easily identified the company’s growth opportunity.  Instead of focusing on the historical losses and deficit equity position,  Magnolia recognized the significant value in their customer relationships and presented the company with a $1 million Line of Credit secured only by the company’s Accounts Receivable.  The funding provided by Magnolia Financial is being used to not only support growth but to also reduce the trade payables owed to the parent company. The company is projecting a profitable year and expects to be “bankable” within 12-18 months.  Neither would have been possible without the flexible working capital credit facility provided by Magnolia Financial