CIT Commercial Credit - Zink Imaging

Division: Phoenix Management Services


Client

ZINK Imaging, Inc. was formerly a division within Polaroid Corporation that was created to advance a new photo-printing technology that does not require ink cartridges, ribbons or toner. ZINK is now a privately held stand-alone company headquartered in Waltham, MA.

Problem

Phoenix Management Services was engaged to conduct an operational due-diligence review on behalf of CIT Commercial Credit of ZINK Imaging, Inc. as a prospective borrower. ZINK was seeking to secure a $8MM revolver and a $2.5MM term loan from CIT Commercial Credit. At that time, ZINK had anticipated a launch of their product within 6 months of securing credit facilities. They had recently purchased a manufacturing facility in NC. The credit facility being provided in the transaction was intended to refinance this purchase and to fund working capital requirements associated with restarting the production in the NC facility.

Solution

Phoenix Management began by performing an assessment of the viability of the products and business plan of ZINK. Over the course of three weeks, Phoenix visited the locations in MA and NC, interviewing key personnel and touring the facilities that housed R&D and production. Phoenix also reviewed the capital structure at that time and the terms of the existing debt.
A thorough review of ZINK’s pro-forma and business plan was conducted. This included detailed examination and evaluation of the individual elements upon which the top-level financial pro-forma was built and conducting independent research to verify the prospective market data included in ZINK’s projections. Phoenix reviewed the professional backgrounds of senior management, the nature of ZINK’s strategic partnerships and the sufficiency of the patent protection of ZINK’s proprietary technologies.
As a result of Phoenix Management’s due-diligence report and recommendation, CIT Commercial Credit extended the requested credit facilities to ZINK. ZINK is preparing for the launch of its first product, which was anticipated in Q1 of 2008.