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January 18, 2007
Thompson Products, Inc. (Thompson) is an international manufacturer and distributor of photo albums and photo frames. Thompson’s manufacturing and distribution facility is located in Massachusetts, while two of its manufacturing facilities are located in mainland China and its trading company is in Hong Kong. Thompson’s customers include most of the major “big box” retailers.
Thompson was being financed by a traditional US asset-based lending facility. As the Company rapidly moved its manufacturing to Asia and began selling product from its Hong Kong-based trading company, its current lender was unable to continue to support the Company’s financing needs because the loan was based solely on US collateral.
The Company’s Asian operations were being funded by internal US cash flow, but the increasingly rapid growth was putting a great strain on liquidity. Thompson needed support from a lender that understood both US and international operations and collateral monitoring. As a smaller middle market company, Thompson was largely precluded from tapping the traditional international lending sources needed to support its Asian operations.
Phoenix Capital Resources worked with Thompson to identify how its collateral could best be allocated between its international operations, and worked with a variety of lenders to explore how best to structure a financing facility to support the Company’s international needs. Ultimately, Phoenix and Thompson selected CIT to support the Company’s US needs and an affiliate of CIT in Asia to support the Company’s international needs.
The solution was a first-of-its-kind hybrid facility whereby CIT factors the Company’s overseas sales under a no-advance, nominal rate factoring facility that, in turn, provides asset support for the Asian-based revolver. The US operations are financed by a traditional asset-based revolver.
“CIT was pleased to offer a global financing solution which provided lending in the US and in Asia against collateral located in both the US and Asia,” said Stephen Leavenworth, Senior Vice President, CIT Commercial Credit. “In addition, through a factoring facility, CIT was able to provide Thompson Products Hong Kong with the credit protection they desired on both its US and foreign receivables.”
Phoenix and CIT’s unique financing structure met Thompson’s international needs and provides the lender with collateral in the overseas operations. The loan provides substantial additional liquidity to Thompson, while limiting the complexity associated with international loan facilities.
Phoenix offers a unique blend of turnaround, crisis and interim management services, capital advisory services and operational due diligence. With extensive experience gained from more than 775 engagements, we understand our clients’ unique business drivers and create specialized solutions to meet their needs in both distressed and growth-oriented situations.
Phoenix specializes in working with middle market companies to enhance and preserve the value of our clients by solving the operational and financial challenges they encounter.
For more information about Phoenix Capital’s capital advisory services, please contact Vince Colistra, Managing Director and Shareholder, at vcolistra@phoenixmanagement.com.
For more information about CIT Commercial Credit, contact Stephen Leavenworth, Senior Vice President, at 212-461-5222. CIT Commercial Credit is a division of The CIT Group/Commercial Services, Inc. (“CIT”), which is one of the world’s leading providers of credit protection, accounts receivable management and lending services. CIT tailors financial solutions that help companies of all sizes increase liquidity, improve cash flow, reduce operating expenses and eliminate customer credit losses. Visit www.cit.com to learn more.
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