Corporate & Real Estate Debt Advisory Services

Reedland Capital Partners is an elite boutique investment bank that specializes in structuring, arranging and negotiating corporate and real estate debt for both publicly-traded and privately-held middle market companies and emerging growth companies. Loan sizes generally range from $20 million to $200 million+ and proceeds can be used for acquisitions, growth capital, dividend recaps, or refinancing of existing debt on more favorable terms.  For over 20 years, Reedland has been highly effective in creating unique debt structures for its clients resulting in better pricing, more loan availability and fewer restrictive financial covenants.

Why Reedland Capital Partners?

Breadth & Quality of Lender Relationship Base

Global Connections

We interact with over 500 lenders around the world and have developed strong relationships at the senior management level with a large number of them because we have worked with many of those lenders over the past 20 years and we continually show them new potential transactions to fund.

In addition to an executive network of commercial banks, both in the U.S. and abroad, we work with a multitude of BDCs, SBICs, life insurance companies, family offices, private debt funds, and other hybrid lenders who fund either asset-based loans, cash flow-based loans or both. The breadth of Reedland’s lender relationships and the diversity of their underwriting criteria enables us to create unique loan structures for companies and facilitate the achievement of their pricing and total leverage goals.

Market Intelligence

Lender sector preferences and underwriting parameters are constantly shifting and evolving which generally results in a very opaque lender marketplace. It is virtually impossible for the executive management of an individual corporate or real estate borrower to stay abreast of all of these constantly changing lender preferences unless they have dedicated in-house personnel solely devoted to this.

Furthermore, just in the past three years, there are over 100 new private debt funds that have commenced business, many of whom are aggressively trying to deploy debt capital in specific industry sectors and who offer very competitive loan terms for difficult transactions. Reedland has extensive and very current knowledge of the constantly growing and shifting debt capital marketplace and can help guide you towards making the best and most well-informed borrowing decisions possible.

Full Service Debt Advisory Firm

Full Service Debt Advisory Firm

Most companies or individuals that place debt are merely loan brokers. Reedland is a highly specialized boutique investment bank that provides a full range of services to meet all of your corporate and real estate debt  advisory needs. Those services include: (i) brainstorming with executive management and creating the best possible loan structure to maximize a company’s financial goals, (ii) assisting in constructing a cogent and fully dynamic financial model and other portions  of a compelling and well-organized lender package, (iii) soliciting and negotiating competing loan proposals from lenders in Reedland’s extensive relationship database, and (iv) liaising with borrower’s counsel and dealing with the multitude of issues that invariably arise prior to the closing and funding of a loan to ensure that the final loan terms do not deviate from the originally signed loan proposal.

Reedland is also available to be retained on a monthly basis as a debt capital markets consultant/advisor for its corporate clients. Having an advisor on retainer to provide expert advice regarding balance sheet restructuring, acquisition financing, or other strategic capital decisions can be very valuable to a company and outsourcing such function is a more economically sound alternative to hiring a full-time employee to perform the same functions or relying on an outside board member who does not have the same level of expertise.

Certainty of Closure

On a transactional basis, Reedland is compensated solely by a success fee. Consequently, Reedland does not take on transactions that it is not certain it can close which makes its interests fully aligned with a company’s executive management. Unlike other firms, Reedland does not send out a mass email to a multitude of potential lenders. We operate in a different fashion.

First, we work with executive management on loan structure, pricing, and leverage goals that we believe are feasible given the company’s current credit circumstances. Then, we will pre-screen the prospective loan with a handful of lenders who we believe are the best suited to achieve our client’s goals and obtain indications on pricing, leverage and other material terms together with an estimate of the timing of closing. This feedback enables us to determine whether we would be able to achieve our client’s funding and timing goals and, concomitantly, has led to our extremely high closure rate on loans.

Certainty of closure is so important, obviously with respect to acquisitions, but also in connection with so many other scenarios such as achievement of internal growth projections, corporate reorganizations, as well as a variety of distressed debt scenarios.

Types of Loans Reedland Arranges:

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A. Asset-Based Loans

(1) Revolving Lines of Credit

  1. Collateral – Accounts receivable and/or inventory. May require first broad lien on all assets.
  2. Pricing – LIBOR + 1.50% per annum and up. Lender fees range from 50 basis points and up depending on lender.
  3. Term – One (1) to Five (5) years.
  4. Underwiting Criteria:
    • Cash flow positive or negative.
    • Foreign receivables financeable (may require separate foreign A/R lender depending on percentage of total A/R base).
    • Government contract receivables and progress billings financeable but more expensive.
    • Service-based receivables financeable if time and materials billed in arrears.
    • Advance rates up to 85% depending on dilution (for dilution greater than 5%, multiply dilution by 3 and subtract from 100% to determine advance rate).
    • Customer concentrations financeable up to 30-50% of total eligible receivable base per customer depending on lender (no concentration limits on factored receivables).
    • All accounts payable over 60 days past due date must be paid off or termed out by closing date or reserved against the line.
    • Accounts receivable financeable up to 90 days past invoice date or 60 days past due date (up to 120 days).
    • Cross-aged receivables generally not part of eligible borrowing base.
    • Inventory loans up to 50% of net book value (commercial bank) or up to 80% of net orderly liquidation value of inventory appraised by an independent third party appraiser chosen by lender (non-bank asset-based lender)
    • Financial covenants (if any) depend on lender, pricing of loan and borrower’s financial condition at closing.
    • All other debt of borrower must be subordinated and subject to inter-creditor agreement acceptable to senior lender.
    • Accounts receivable financeable up to 90 days past invoice date or 60 days past due date (up to 120 days).
    • All Industries.
    • Countries – All of North America, and certain portions of South America, Asia, Europe and Australia.
    • Loan Size — $5 MM – $200 MM

(2) Factoring Lines

  1. Collateral – Purchase of accounts receivable by factor; loans collateralized by inventory as part of factoring line. No lien against other assets.
  2. Pricing – All-in pricing of 10% per annum and up. Pricing depends on lender and volume of receivables purchased.
  3. Term – One (1) to Five (5) years.
  4. Underwiting Criteria:
    • Cash flow positive or negative.
    • Foreign receivables financeable (may require a separate foreign a/r factor).
    • Service-based receivables financeable (if time and materials billed in arrears).
    • Advance rates up to 85% – 90% (depending on dilution).
    • Any size customer concentrations financeable.
    • All accounts payable over 60 days past due must be paid off or termed out by closing date or reserved against the line.
    • Accounts receivable financeable up to 90 days past invoice date or 60 days past due date (up to 120 days).
    • Inventory loans generally will have sub-limits and not all factors will provide.
    • Financial covenants – none.
    • No subordination of other debt required unless existing lien on a/r or inventory.
    • All industries.
    • Countries – all North America, and certain portions of Europe, Asia and Australia.
    • Accounts receivable financeable up to 90 days past invoice date or 60 days past due date (up to 120 days).
    • All Industries.
    • Countries – All of North America, and certain portions of South America, Asia, Europe and Australia.
    • Loan Size — $5 MM – $75 MM.

(3) Equipment Financing

  1. Collateral – existing machinery and/or equipment or machinery and/or equipment to be acquired with financing.
  2. Pricing – 5% per annum and up depending on creditworthiness of borrower and type of equipment financing. Could be up to 18% per annum if start-up company or re-start.
  3. Term – One (1) to Five (5) years.
  4. Loan Size– $5 MM – $200 MM.
  5. Types of Equipment Financing:

    1. Equipment Loans

    • Loan against 60-80% of the net orderly liquidation value (OLV) of the machinery/equipment collateral. “Net OLV” is defined as the aggregate amount of the proceeds that would be realized in a sale of the assets over a 180-day period (net of all sale costs) as determined by a third party appraiser.
    • Equipment loans can be made for start-up companies or re-starts at pricing between 12% and 18% per annum depending upon how much cash is on the balance sheet and/or how many months until the borrower is cash flow positive.
    • Most senior lenders (with certain specific exceptions) will not make a stand-alone equipment loan unless it is part of a senior credit facility that includes a revolving line of credit.

    2. Capital Leases

    • Definition – This is a fully amortized lease whereby at the end of the lease term the lessee/borrower takes title to the asset.
    • Term – One (1) to Seven (7) years.
    • Pricing – Generally 5%-8% per annum.
    • Generally capital leases are made based on the creditworthiness of the borrower or guarantor. Not a hard money loan.
    • Usually can close in one to three weeks.
    • Can be used in project finance and can include all soft costs depending on creditworthiness of borrower or guarantor.
    • Advance rate on new machinery/equipment can be up tp 100% and up to 80% against existing machinery and equipment.

    3. Sale/Leaseback

    • Definition – Borrower sells existing owned machinery and/or equipment to lender who then leases the asset(s) back to the borrower under a true lease (i.e., no amortization and no delivery of title at the end of the lease term) or borrower has lender purchase new machinery and/or equipment for borrower’s account and then leases it back to borrower.
    • Pricing – 5% per annum and up.
    • Term – One (1) to Five (5) years.

    4. Real Estate Loans

    • Commercial, industrial or residential.
    • Hard money loan on commercial real estate.
    • Bridge loans.
    • Pricing – depends on collateral, creditworthiness of borrower, debt service coverage and structure.
    • Term – Six (6) months up to Twenty-Five (25) years.
    • Structure – interest only, non-current pay with accrual, or partially or fully amortized.
    • Loan-to-value – 50%-80% depending on the type of loan, amount of collateral and creditworthiness of borrower.
    • Loan Size — $5 MM – $200 MM.

    5. Oil and Gas Financing

    1. Collateral – Primarily proved developed producing oil and/or gas reserves (PDP), and to a lesser extent, proved undeveloped reserves (PUD).
    2. Pricing – 5% per annum and up.
    3. Term – One (1) to Five (5) years.
    4. Advance Rate – 50%-80% depending on lender, pricing and reserve report.
    5. Reserve Report – Third party reserve report as of a recent date required.
    6. NPV generally calculated at 10% (PDP-10).
    7. Lines of Credit, Term Loans and Letters of Credit available.
    8. Coverage ratios – 1.5-2.0x
    9. Countries – all of North America and portions of South America (in most countries, lender cannot obtain perfected security interest)
    10. Loan Size – $10 MM- $200 MM

(4) Other Fixed Asset Financing

(5) Commercial Real Estate Loans

B. Cash Flow-Based Loans

(1) Senior Debt

  1. Collateral – 1st broad lien on all assets of borrower.
  2. Pricing – LIBOR + 4% and up.
  3. Term – One (1) to Five (5) years.
  4. Amatorization – Generally fully amortized over the life of the loan.
  5. Underwiting Criteria:
    • Minimum $3 MM of EBITDA (preferably at least $5 MM – $7 MM of EBITDA, net of capital expenditures for the trailing 12 months.
    • Minimum $10 MM of revenue for the trailing 12 months.
    • Stable historical cash flows preferable (at least 18-24 months).
    • Strong experienced management team with no material background issues.
    • Funded debt multiple of 2x-4x depending on total amount of EBITDA, historical financial performance, industry and business plan.
    • Debt service coverage ratios of at least 1.5x.
    • Tangible asset coverage preferable but not required.
  6. Industries – All (certain industries will have tighter underwriting criteria).
  7. Financial Covenants – Generally, total leverage, minimum liquidity and various P&L covenants.
  8. Countries – All North America, and certain portions of South America, Asia, Europe and Australia.
  9. Loan Size – $5 MM- $100 MM.
  10. Loan Purposes – Growth, acquisitions or recapitalization/refinancing.

(2) Mezzanine Debt

  1. Collateral – 2nd lien on all or selected assets or unsecured, depending on lender.
  2. Pricing – 8% per annum and up.
  3. Term – One (1) to Five (5) years.
  4. Amortization – None; interest only with balloon payment at maturity.
  5. Underwiting Criteria:
    • Minimum $2 MM of EBITDA (preferably at least $3 MM – $5 MM of EBITDA) net of capital expenditures for the trailing 12 months.
    • Minimum $10 MM of revenue.
    • Stable historical cash flows (at least 18-24 months).
    • Strong experienced management team.
    • Funded debt multiple of 2x-4x depending on total amount of EBITDA, historical financial performance, industry and business plan.
    • Debt service coverage ratios of at least 1.5x.
    • Tangible asset coverage preferable but not required.
  6. Industries – All (although real estate and financial services more difficult).
  7. Financial Covenants – Generally, total leverage, minimum liquidity, and various P&L covenants.
  8. Countries – All North America, and certain portions of South America and Europe.
  9. Loan Size – $5 MM — $100 MM.
  10. Loan Purposes – Growth, acquisitions or recapitalization/refinancing.

(3) Unitranche Loans

C. Venture/Enterprise Value Loans

(1) Enterprise Value Loans

  1. Collateral – 1st broad lien on all assets (including intellectual property).
  2. Pricing – 11%-13% per annum + 1%-3% of borrower’s equity in warrants.
  3. Term – One (1) to Five (5) years.
  4. Underwiting Criteria:
    • Borrower must be backed by nationally recognized venture capital equity firm(s) or large strategic corporate investor(s) who will support borrower.
    • Either current revenue or clearly identifiable ramp-up to revenue over the next 12-24 months.
    • Strong experienced management team with no material background issues.
    • Total loan commitment size will be predicated in part on current pre-money valuation of borrower.
    • May require equity co-invest.
  5. Structure – Term loans only; can be delayed draws based upon achievement of milestones; generally interest-only loans with balloon payment at maturity.
  6. Industries – Biotech and Technology.
  7. Financial Covenants – transaction specific.
  8. Countries – North America only.
  9. Loan Size – $5 MM – $30 MM.

(2) Revolving Lines of Credit

  1. Collateral – Accounts receivable and/or inventory. May require first broad lien on all assets.
  2. Pricing – LIBOR + 1.50% per annum and up. Lender fees range from 50 basis points and up depending on lender.
  3. Term – One (1) to Five (5) years.
  4. Underwiting Criteria:
    • Cash flow positive or negative.
    • Foreign receivables financeable (may require separate foreign A/R lender depending on percentage of total A/R base).
    • Government contract receivables and progress billings financeable but more expensive.
    • Service-based receivables financeable if time and materials billed in arrears.
    • Advance rates up to 85% depending on dilution (for dilution greater than 5%, multiply dilution by 3 and subtract from 100% to determine advance rate).
    • Customer concentrations financeable up to 30-50% of total eligible receivable base per customer depending on lender (no concentration limits on factored receivables).
    • All accounts payable over 60 days past due date must be paid off or termed out by closing date or reserved against the line.
    • Accounts receivable financeable up to 90 days past invoice date or 60 days past due date (up to 120 days).
    • Cross-aged receivables generally not part of eligible borrowing base.
    • Inventory loans up to 50% of net book value (commercial bank) or up to 80% of net orderly liquidation value of inventory appraised by an independent third party appraiser chosen by lender (non-bank asset-based lender)
    • Financial covenants (if any) depend on lender, pricing of loan and borrower’s financial condition at closing.
    • All other debt of borrower must be subordinated and subject to inter-creditor agreement acceptable to senior lender.
    • Accounts receivable financeable up to 90 days past invoice date or 60 days past due date (up to 120 days).
    • All Industries.
    • Countries – All of North America, and certain portions of South America, Asia, Europe and Australia.
    • Loan Size — $5 MM – $200 MM

(3) Equipment Financing

  1. Collateral – existing machinery and/or equipment or machinery and/or equipment to be acquired with financing.
  2. Pricing – 5% per annum and up depending on creditworthiness of borrower and type of equipment financing. Could be up to 18% per annum if start-up company or re-start.
  3. Term – One (1) to Five (5) years.
  4. Loan Size– $5 MM – $200 MM.
  5. Types of Equipment Financing:

    1. Equipment Loans

    • Loan against 60-80% of the net orderly liquidation value (OLV) of the machinery/equipment collateral. “Net OLV” is defined as the aggregate amount of the proceeds that would be realized in a sale of the assets over a 180-day period (net of all sale costs) as determined by a third party appraiser.
    • Equipment loans can be made for start-up companies or re-starts at pricing between 12% and 18% per annum depending upon how much cash is on the balance sheet and/or how many months until the borrower is cash flow positive.
    • Most senior lenders (with certain specific exceptions) will not make a stand-alone equipment loan unless it is part of a senior credit facility that includes a revolving line of credit.

    2. Capital Leases

    • Definition – This is a fully amortized lease whereby at the end of the lease term the lessee/borrower takes title to the asset.
    • Term – One (1) to Seven (7) years.
    • Pricing – Generally 5%-8% per annum.
    • Generally capital leases are made based on the creditworthiness of the borrower or guarantor. Not a hard money loan.
    • Usually can close in one to three weeks.
    • Can be used in project finance and can include all soft costs depending on creditworthiness of borrower or guarantor.
    • Advance rate on new machinery/equipment can be up tp 100% and up to 80% against existing machinery and equipment.

    3. Sale/Leaseback

    • Definition – Borrower sells existing owned machinery and/or equipment to lender who then leases the asset(s) back to the borrower under a true lease (i.e., no amortization and no delivery of title at the end of the lease term) or borrower has lender purchase new machinery and/or equipment for borrower’s account and then leases it back to borrower.
    • Pricing – 5% per annum and up.
    • Term – One (1) to Five (5) years.

    4. Real Estate Loans

    • Commercial, industrial or residential.
    • Hard money loan on commercial real estate.
    • Bridge loans.
    • Pricing – depends on collateral, creditworthiness of borrower, debt service coverage and structure.
    • Term – Six (6) months up to Twenty-Five (25) years.
    • Structure – interest only, non-current pay with accrual, or partially or fully amortized.
    • Loan-to-value – 50%-80% depending on the type of loan, amount of collateral and creditworthiness of borrower.
    • Loan Size — $5 MM – $200 MM.

    5. Oil and Gas Financing

    1. Collateral – Primarily proved developed producing oil and/or gas reserves (PDP), and to a lesser extent, proved undeveloped reserves (PUD).
    2. Pricing – 5% per annum and up.
    3. Term – One (1) to Five (5) years.
    4. Advance Rate – 50%-80% depending on lender, pricing and reserve report.
    5. Reserve Report – Third party reserve report as of a recent date required.
    6. NPV generally calculated at 10% (PDP-10).
    7. Lines of Credit, Term Loans and Letters of Credit available.
    8. Coverage ratios – 1.5-2.0x
    9. Countries – all of North America and portions of South America (in most countries, lender cannot obtain perfected security interest)
    10. Loan Size – $10 MM- $200 MM

D. Project Financing

Details

Certain lenders will provide the construction and/or long-term financing of energy, alternative energy or infrastructure projects collateralized by the projected future cash flows of the project rather than the borrower’s balance sheet or existing cash flow. Generally, project finance takes the form of non-recourse loans which are secured by the project assets and repaid entirely from project cash flow.

Lenders which provide project finance will typically advance between 50%-80% of the total financing depending upon, among other things, the financial strength and track record of the sponsor/borrower, the quality and certainty of both the off-take agreement(s) and the supply agreement(s) and the type of project being financed.

  1. Loan Size – $20 MM – $50 MM.

E. Bridge Loans

Details

Certain lenders will provide corporate and/or real estate bridge loans for up to 18 months collateralized by certain assets or certain future cash flows of the borrower, or the realization of one or more liquidity events.

  1. Loan Size – $10 MM – $50 MM.

F. Royalty Financing

Details

If a healthcare company has a product licensing agreement in place or intends to have one in place in the immediate future, and that healthcare company receives or will receive a royalty or a portion of the product revenue stream, certain lenders will purchase all or a portion of those future royalties in exchange for an upfront payment and, depending on the structure, potential future payments. This enables the borrower company to monetize its current and/or future royalty stream for immediate liquidity.

Certain lenders will monetize between 50%-100% of future royalty payments depending upon the financial strength of the licensee, the certainty of future payments, the timing of those payments and a variety of other factors. The pricing of such royalty financing is generally in the mid-teens.

  1. Loan Size – $5 MM – $100 MM.

G. Purchase Order Financing

Details

Certain lenders will lend against fully vested and non-conditional purchase orders. These loans are typically 30-60 days in term (in certain circumstances up to 120 days) and are generally used to finance the manufacture and/or assembly of a specific product(s) that is the subject of the purchase order. The loan is repaid when the product is shipped to the customer and an account receivable is booked. When the receivable is booked, it is then financed by an accounts receivable lender who repays the purchase order lender. Consequently, a purchase order financing must be simultaneously paired with an accounts receivable financing in order to assure the purchase order lender of timely repayment.

  1. Pricing – Generally 2%-3% per month.
  2. Term – Up to 60 days (in certain limited circumstances up to 120 days).
  3. Loan Size – $5 MM – $50 MM.
  4. Advance Rate – 50%-100% of the total dollar amount of the purchase order (depending on the gross margin of the product).
  5. Industry – Manufacturing.

Meeting Client’s Primary Goals

PRICING

Discreet, competitive bidding process with specifically targeted lenders from our extensive lender relationship base to obtain the best possible loan pricing. This process offers our clients a distinct advantage over a corporate CEO or CFO directly approaching a handful of well-known lenders based on their sector or regional focus, or a loan broker sending out a mass email to its entire lender database.

LEVERAGE

With our established relationship network of over 500 lenders worldwide, together with our ability to create innovative loan structures that maximize loan availability, Reedland can frequently deliver leverage up to 6 or 7 times, depending on a company’s enterprise value.

LESS RESTRICTIVE FINANCIAL COVENANTS

Reedland’s team, which includes former senior bank counsel,  are experts in negotiating less restrictive and fewer financial covenants for its clients. These covenants are often far more negotiable than a company or its counsel may believe. Our expertise in this context is extremely valuable for any company with, for example, unpredictable EBITDA because of rapid growth, senior management changes or a turnaround scenario.

RESTRUCTURING BALANCE SHEET

Restructuring a company’s balance sheet can often be the key to achieving superior operating results. Reedland provides expert advice with the respect to, among other things, converting debt to equity, refinancing out expensive or other problematic debt, or restructuring existing debt in a variety of ways to increase leverage when additional equity is not an option.

Process

Depending on the size and nature of the transaction, our corporate debt advisory engagements are typically concluded and loans funded within 30-60 days of our receipt of standard and customary financial information regarding the company.

WEEK 1

Sign NDA, review business plan, company history and historical financial information or public filings (if applicable), together with detailed projections; discussions with management regarding structure, pricing, leverage and other financial or operational goals.

WEEK 2

Preliminary conversations with lenders to determine levels of interest, execute lender NDAs and circulate preliminary loan packages; arrange introductory and/or due diligence calls with management.

WEEK 3

Ongoing lender due diligence; solicit loan proposals and review and discuss with management.

WEEK 4+

Continuing lender due diligence, on site visit(s) (if applicable), negotiation of definitive loan documentation, and loan closing.

Contact us at your convenience to discuss how Reedland Capital Partners might be able to assist you with your company’s financing objectives.