vcfo speaks bank. We leverage deep lender relationships and expertly prepare financial statements, forecasts, and supportive documentation to get OFS companies the best possible ABL facility. Learn how we recently delivered a 20% reduction in one client’s credit facility costs.
Asset-Based Lending (ABL) looms large for oilfield equipment and services (OFS) companies seeking access to capital needed for business growth and effective operations in fluid conditions. Optimal ABL facilities enable vital borrowing capacity, better liquidity, and greater flexibility.
In contrast, suboptimal ABL facilities limit options, strain operations, and force unhealthy tradeoffs.
Getting the best ABL facility possible for OFS firms requires application know-how, negotiation expertise, strong lender relations, and the utmost clarity and completeness when presenting your portfolio of financial statements, forecasts, and proposed use of funds. Here’s what happens and how we help.
An undersized ABL line of credit with a high interest rate left this OFS firm constantly cash constrained. These ABL funds bridged gaps formed by needing to meet payroll every 15 days while clients were paying at 90 days. However, the $2M cap on their line of credit was $3M shy of what they needed to both cover payroll and take on new work. New project opportunities evaporated because of their inability to secure additional workers and equipment needed to support them.
A fractional CFO from vcfo was brought on board to facilitate refinancing, reinforce the firm’s existing ABL facility, and enable the solicitation of competitive bids. Objectives included lowering the ABL facility’s interest rate, improving agreement terms, and increasing borrowing capacity. Among other activities, expertise provided by vcfo’s Consulting CFO to achieve these and other objectives entailed:
- Preparing financial statements in accordance with best practices and lender preferences
- Developing an information booklet to support wider solicitation of competitive bids
- Analyzing, reviewing, and negotiating term sheets and deal parameters
- Providing clear criteria and recommendations for winning bid selection
- Closing and reworking the balance sheet for cash optimization under the new ABL facility
The fractional CFO’s actions and span of lender relationships generated numerous bids and a solid selection of ABL facilities that would meet the company’s needs and alleviate the burdens brought on by its existing ABL facility. Upon selecting a winner and finalizing details of the agreement, the new ABL facility was put in place and provided the company with:
- Significantly lower costs of debt capital
- Ability to take on new capital projects, equipment, and employees
- Resources needed to assess previously unavailable expansion paths
- Greater flexibility to manage market fluctuations and capitalize on opportunities
- Peace of mind across the executive team
WE’RE HERE TO HELP
We’ve partnered with more than 5,000 businesses in our 27 years and can put our expertise and experience to work for you. Reach out and we’ll schedule a call to learn more about your company and see how we can help.