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TSL DIGITAL IS NOW LIVE 
Our April issue features articles including: Online Lenders Push to Maturity; As Clubbed ABL Financings Gain Traction, Clubbed ABL League Tables Make Sense; Do Lenders Really Need Promissory Notes? as well as two roundtables: Regulated or Nonregulated? That is the Question, focusing on key differences in institutions, and Taking the Pulse of Private Debt. Click here to get started.

The Secured Lender's April 2017 Issue

 

FEATURE STORIES
Online Lenders Push to Maturity
Online lending may represent a very small portion of overall lending, but it is playing an increasing role in how small and midsized businesses are funded. Here we speak with some of the key players as well as a factor, asset-based lender and attorney. By Myra Thomas READ MORE

As Clubbed ABL Financings Gain Traction, Clubbed ABL League Tables Make Sense
Maria C. Dikeos of Thomson Reuters LPC discusses the increase in clubbed ABL financings. By Maria Dikeos READ MORE

Regulated or Nonregulated? That is the Question…
The editor-in-chief of The Secured Lender held a roundtable discussion with several lenders who have worked in both regulated and nonregulated institutions to find out what makes one move to one type over another, what the key differences are and if the grass is greener on the other side. The participants include Marty Battaglia of Encina Business Credit, David Grende of Siena Lending Group, Michael Haddad of Sterling National Bank, Mark Hafner of Celtic Capital Corp., Tom Otte of White Oak Global Advisors LLC and Richard Palmieri of ANR Partners LLC. By Michele Ocejo READ MORE

Taking the Pulse of Private Debt
Industry leaders discuss the current state of the private debt market, what to expect in 2017 and going forward, the outlook for restructurings and thoughts on a possible shakeout. 
By Eileen Wubbe READ MORE  

Do Lenders Really Need Promissory Notes? 
Once indispensable, a lender’s reliance on promissory notes in commercial loan transactions has declined significantly in recent years. An analysis of the historical benefits afforded by promissory notes and changes in law and practice explain the reasons behind the trend and illustrate that the limited benefits provided by promissory notes in today’s legal world may no longer warrant their use. By Hilary P. Jordan and Anthony C. Cianciotti READ MORE 




Recapture CFA's 40 Under 40 Awards: The Start of a New Annual Tradition & Supporting the CFA Education Foundation
 
 
TSL DEPARTMENTS

TSL Profile: Super G Capital
Super G Capital, LLC is filling a credit void in the lower middle-market with its subordinated cash flow-based term loans from $500,000 - $5 million. Charlie Perer, head of originations, explains more on this niche business and how his origination strategy is focused on partnering with senior lenders. By Eileen Wubbe READ MORE

TSL Profile: Scargo Hill Capital
Commercial finance and retail industry veteran Andy Moser kicked off 2017 by launching Scargo Hill Capital in January with co-founder Thomas Lynch. Scargo Hill’s partnership also includes SB Capital Group, a Schottenstein affi liate, 360 Merchant Solutions, and merchant capital provider Arena Investors. Here they discuss how being immersed in the retail market with a unique point of view is their approach to success. By Eileen Wubbe READ MORE

What Would You Do?
In this edition of What Would You Do?, a distressed borrower of Overadvance Bank intends to file for Chapter 11 to conduct an orderly liquidation of its retail store chain, and requests that the Bank consent to the borrower’s use of store closing sale proceeds (i.e., the Bank’s cash collateral) during the bankruptcy to fund the borrower’s liquidation, rather than seek continued financing from the Bank. By Dan Fiorillo and Jim Cretella READ MORE  
The cases we have selected for this issue address whether the presumption against extraterritorial application of legislation bars the avoidance of extraterritorial preferential transfers under the Bankruptcy Code. By Jonathan Helfat and Richard Kohn READ MORE 

Revolver
Paul D. Schuldiner of Rosenthal Trade Capital discusses why lending in the middle market is about more than just money.
READ MORE 
TSL TRENDING STORY
Online Lenders Push to Maturity
By Myra Thomas

Online lending may represent a very small portion of overall lending, but it is playing an increasing role in how small and mid-sized businesses are funded. Here we speak with some of the key players as well as a factor, asset-based lender and attorney.


 

PAST TSL ISSUES
TSL INTERVIEW
Andrea Petro: CFA's New President Placed Emphasis On Engaging The Next Generation

By Michele Ocejo

CFA’s new president, Andrea Petro, is the executive vice president and division manager of the Lender Finance division of Wells Fargo Capital Finance, based in Dallas, TX. With over 30 years of experience in asset-based lending, Andrea established the Lender Finance division in 2000, with the exclusive mission of providing financing for specialty finance companies. Her success with the Lender Finance division led to the expansion of her role and the formation of the Resort Finance and Supply Chain Finance unitsRead More


Preparing for Big Changes in the Small-Business Lending Market

By Tim Atkinson

As new technology sweeps into the small business lending market, we hear how CFA members are adapting new technology to position themselves for future success. Read More


The Honorable Sheila C. Bair: From the Glass Ceiling to Glass-Steagall
By Michele Ocejo

Sheila C. Bair served as the 19th Chairman of the Federal Deposit Insurance Corporation for a five-year term, from June 2006 through July 2011. Since leaving the FDIC, Chairman Bair has continued her work on financial policy issues as a Senior Advisor to the Pew Charitable Trusts. On August 1 she transitioned from her position at Pew to become the President of Washington College in Chestertown, MD. Bair will be the luncheon speaker during CFA’s Annual Convention in Austin on November 12. Read More

 

 

What Asset-Based Lenders ShouldKnow About Using IP as Collateral
By David Peress and Gabe Fried

In the discussion that follows, executives fromHilco Streambank focus on the characteristicsof intellectual property most often used ascollateral, consider the steps that lenders shouldtake to preserve asset values when a borrower isdistressed, and examine available strategies ina recovery transaction. They also include a fewrecent examples of intellectual property sales bycompanies whose intellectual property had beenused to secure an asset-based loan. Read More

INSIGHTS FROM A MIDDLE-MARKET ASSET-BASED LENDER
By Doug Vitek

Doug Vitek of Associated Bank offers his point of view on the middle marketRead More



PREDICTIONS FOR INTERCREDITOR ARRANGEMENTS IN 2015
AND BEYOND – THE DEVIL REALLY IS IN THE DETAILS

By Katherine E. Bell, Jennifer B. Hildebrandt and Jennifer S. Yount

Intercreditor arrangements are one of the most challenging aspects of transactions, yet they have become increasingly prevalent in recent years. Changes in law, the regulatory environment, the credit markets, the economy, and the way that companies do business can all trigger new developments in intercreditor arrangements.  This article examines five areas where we anticipate developments of intercreditor arrangements in 2015 and beyond and describes the reasons for the developments. Read More




EVERYTHING YOU NEED TO KNOW RIGHT NOW ABOUT SUPPLY CHAIN FINANCE
By Lionel Taylor and Igor Zax

What is the actual definition of supply chain finance? What are the barriers to its widespread usage? What trends are currently affecting supply chain finance? The answers to these questions and more are answered. Read More



TRADE CREDIT INSURANCE PROVES TO BE A USEFUL FINANCIAL TOOL
By Eileen Wubbe

With exports increasing, trade credit insurance use is also on the rise as banks and borrowers use it to enhance loans and drive sales growth. Insurers and lenders discuss the evolution of trade credit insurance, its benefits and overcoming misconceptions. Read More


TSL INTERVIEW SERIES: INTERVIEW WITH GENERAL MICHAEL HAYDEN, RET.

CFA/TSL Lunch Series: Interview with General Michael Hayden, Ret.

At the Center of Central Intelligence. General Michael Hayden became director of CIA in May of 2006, capping a career in service to the United States that included nearly 40 years in the Air Force. He served until 2009. From 2005-2006, General Hayden was the country's first principal deputy director of national intelligence and the highest-ranking military intelligence officer in the country.

From 1999-2005, Hayden had served as the director of the National Security Agency (NSA) and chief of the Central Security Service (CSS) after being appointed by President Bill Clinton. He worked to put a human face on the famously secretive agency, explaining to the American people the role of the NSA and making it more visible on the national scene.


BANKRUPTCY REFORM COMMISSION PROPOSES FUNDAMENTAL CHANGES TO RIGHTS OF SECURED LENDERS IN CHAPTER 11 CASES
By Brian Cove

A bankruptcy trade group has issued wide-ranging recommendations to Chapter 11 of the Bankruptcy Code that could erode the rights of secured lenders, if enacted. This article provides an overview of the proposals that are the greatest cause of concern for the commercial finance industry.  Read More


Merchant Cash Advance: Friend or Foe?
By Gina Mackenzie and Donna Hinrichs

Interested in partnering with an MCA, but need advice on how to pick the right partner for you? Look no further. Two executives from RapidAdvance explain what to look for in an MCA partner. Read More


The TSL Interview: Coaching Up the CFA - A Conversation with Pat Trammell, CFA’s New President
By Michele Ocejo

CFA’s new president, Patrick Trammell, is the founder and president of Southeastern Commercial Finance, LLC. In this extensive conversation, he discusses his history with CFA, his perspectives on CFA and the industry, his priorities as CFA president and why he believes CFA’s best days are ahead. Read More

 

 

Changing the Risk Analysis: Eleventh Circuit IssuesOpinion Supporting Non-Debtor Releases in Chapter 11 Plans
By Ron C. Bingham, II and Daniel J. Ferretti

The Eleventh Circuit Court of Appeals, which presides over appeals fromfederal courts in Alabama, Florida, and Georgia, recently approved ofnon-debtor releases in Chapter 11 bankruptcy plans. The decision sets outa test for bankruptcy courts to use when reviewing release provisions.This article discusses the case’s relevance and steps lenders can take tomitigate its effect. Read More

BORROWERS AS DISTRIBUTORS OF TRADEMARKED INVENTORY: SUGGESTIONS FOR THE ASSET-BASED LENDER
By Anthony Cianciotti

Distributors of inventory frequently sell products bearing a third party’s trademark. Trademark law and the distributor’s agreement with the trademark owner may limit the sale of trademarked inventory after termination of the distribution agreement. An asset-based lender should understand both when considering financing trademarked inventory. Read More



TSL INTERVIEW
A CONVERSATION WITH KAH CHYE TAN 
By Michele Ocejo

Kah Chye Tan is chair of ICC Banking Commission. The Commission is part of International Chamber of Commerce headquartered in Paris. Tan was appointed to this position in 2011 to lead the development of the Commission’s policy and standard developments initiatives. Major initiatives launched in the last three years included the establishment of the ICC Trade Finance Register, which has helped policy makers to improve the regulatory capital framework for trade finance.

Tan is also a managing director of JPM Chase, London. He joined JPM London in 2013 to drive the bank’s capital management and securitization initiative in trade finance and loans products. Prior to this, Tan had worked for various global banks. More recently, he was vice chairman of Barclays Corporate Banking, London and Global Head of Corporate Cash and Trade for Standard Chartered Bank, Singapore. Read More



IS CHINA’S LEGAL REFORM GOOD FOR BUSINESS AND INVOICE FACTORING?
By Stephen M. Perl

An expert in the region offers insight into the legal environment and new registry system in China for factoring. Read More


TSL INTERVIEW
ISABEL FERNANDEZ: CHIEF COMMERCIAL OFFICER AT GE CAPITAL, AMERICAS
By Michele Ocejo

In April 2014, Isabel Fernandez became the chief commercial officer at GE Capital, Americas, one of the largest providers of commercial loans and leases to mid-market companies throughout the Americas. In this interview, she discusses her priorities as chief commercial officer, her theory on managing diverse groups and her advice to women entering the industry. Read More

TSL EXPRESS TOP STORY
Gordon Brothers Finance Company Completes $31.2 Million Term Loan Financing to SkyWater Technology Foundry
Gordon Brothers Finance Company announced today that it has entered into a $31.2 million term loan financing transaction with SkyWater Technology Foundry, Inc. for the purchase of Cypress Semiconductor Corp.’s Bloomington, MN, semiconductor wafer fabrication facility, Cypress Semiconductor (Minnesota) Inc.

Backed by Minnesota-based holding company Oxbow Industries, LLC, SkyWater has purchased the capital stock of the subsidiary and will operate the fab as a standalone business that will manufacture wafers for Cypress and for other semiconductor manufacturers. The operation will now operate under the name SkyWater.

“We are pleased to provide SkyWater and Oxbow with the financing to support the acquisition of the Bloomington-based business,” said Lawrence Klaff, senior managing director with Gordon Brothers Finance Company. “Thanks to our partnership with Bob Maroney of Gordon Brothers’ Commercial & Industrial division, we had a clearer understanding of the business’s underlying asset value. We look forward to supporting the ongoing operations of the company.”

Bart Zibrowski, CFO of SkyWater, added, “We were impressed with Gordon Brothers Finance Company’s efficiency and grasp of the business opportunity, as well as their ability to provide a financing solution on an efficient timeline. We look forward to our continued partnership.”

SkyWater will continue to operate out of its Bloomington, MN, fabrication facility.

Based in Boston, MA, Gordon Brothers Finance Company (www.gbfinco.com) is a private, best-in-class, asset-based provider of loans to middle market companies globally. Through our exclusive, strategic partnership with Gordon Brothers, and with ready resources, we turn asset knowledge into capital. Solely focused on lending, our dedicated team is nimble, creative, and responsive in structuring credit agreements. We serve as a complement to standard, first-tier financing, extending credit beyond traditional sources for our clients.

Since 1903, Gordon Brothers (www.gordonbrothers.com) has helped lenders, operating executives, advisors, and investors move forward through change. The firm brings a powerful combination of expertise and capital to clients, developing customized solutions on an integrated or standalone basis across four service areas: valuations, dispositions, operations, and investments. Whether to fuel growth or facilitate strategic consolidation, Gordon Brothers partners with companies in the retail, commercial, and industrial sectors to put assets to their highest and best use. Gordon Brothers conducts more than $70 billion worth of dispositions and appraisals annually. Gordon Brothers is headquartered in Boston, with 25 offices across five continents.

SkyWater is a world-class 200mm semiconductor wafer manufacturing facility located in Bloomington, Minn. SkyWater is the only U.S. owned and independently operated semiconductor factory accredited by the Defense Microelectronics Activity as a Category 1A Trusted Fab, enabling it to process Classified and Trusted Unclassified designs for the U.S. Department of Defense. SkyWater is also automotive qualified, competitive with Asian foundries of similar size and technology mix, and is capable of high-volume manufacturing. CMI has capacity for 11,000 wafers starts per month, with on-site wafer sort and failure analysis capability. SkyWater primarily manufactures 200 millimeter semiconductor wafers and supports a specialty foundry.

 

 

TSL EXPRESS INDUSTRY HEADLINES
Wells Fargo Promotes Friesth to Central Division Manager for Middle Market Banking
Wells Fargo (NYSE:WFC) announced that veteran commercial banker Grant Friesth will head the Central Division for Middle Market Banking, effective immediately. Friesth, who previously led Middle Market Banking in Iowa, now also manages Nebraska, North Dakota, and South Dakota operations. READ MORE
     

Asset-based Finance Reaches Record High in UK
Asset-based lending hit a record UK high of £22.2 billion in 2016 as businesses look to alternative methods of funding for acquisitions, according to the Asset Based Finance Association (ABFA). ABFA claims the 13 percent jump on 2015 lending is a result of UK businesses turning to asset-based finance, instead of more traditional sources such as bank overdrafts and loans, to finance growth and M&A activity. READ MORE
Kongsberg Gruppen Signs NOK 2.30 Billion Revolving Credit Facility
New facility has a tenor of five years with two one-year extension options and replaces existing revolving credit facility of 1.50 billion crowns Kongsberg has had since 2014. READ MORE 
iHeartCommunications, Inc. Announces Private Term Loan Offers in Connection with a Proposed Global Restructuring of Its Indebtedness
iHeartCommunications, Inc. commenced private offers the (Term Loan Offers) to lenders under the Company’s Term Loan D and Term Loan E facilities (Existing Term Loans) to amend the Existing Term Loans and/or exchange them for new term loans of iHeartCommunications (the New Term Loans), and new securities of iHeartCommunications, iHeartMedia, Inc., CC Outdoor Holdings, Inc., and/or Broader Media, LLC. READ MORE 
Perpetual Energy Inc. Confirms Closing of Debt Financing, Private Placement and Credit Facility Amendments and Announces Early Redemption for 2018 Senior Notes
The $45 million second lien senior secured term loan with Alberta Investment Management Corporation (AIMCo) included the issuance of 5.40 million warrants to purchase Common Shares at any time prior to March 13, 2020 at an exercise price of $2.34 per Common Share. READ MORE 


INDUSTRY DEALS 
Gehl Foods Obtains $15 Million in Equipment Financing From CapX Partners
CapX Partners (CapX) announced the closing of a $15 million lease line of credit to Gehl Foods, a leading contract manufacturer/packager.

Gehl Foods (Gehl), (www.gehls.com) headquartered in Germantown, Wisconsin, creates shelf-stable, dairy-based cheese sauces, puddings, yogurt and nutritional beverages, and is now the nation’s leading aseptic manufacturer.

Gehl products are sold through both foodservice and retail channels. Their partners include 200,000 of the largest retailers, foodservice operators, and distributors throughout the United States, Canada, and Mexico. The company produces top-quality products out of four state-of-the-art facilities with over 800,000 square feet of manufacturing and storage space.

CapX recognized Gehl’s long-standing reputation for quality, safety, and performance in the dairy product manufacturing industry. With robust growth opportunities on the horizon and the need for increased production capacity, CapX provided the Company with a customized lease line of credit. This equipment lease facility will fund new automated cartoning and bottling production lines and will fulfill the Company’s need for increased manufacturing capacity.

Tim Preuninger, chief financial officer at Gehl Foods: “We have found CapX very easy to work with. They are extremely responsive, they do what they say they will do, and they offered a strong financing program that was flexible to meet our needs. I would enthusiastically recommend them to anyone that is looking for a competitively priced financing option that also requires a partner that can be flexible to address changing requirements.”

Bryan Rozum, director at CapX Partners: “CapX is pleased to work with Wind Point Partners on our third growth capital financing together. After gathering details on Gehl’s 2017 capex budget, CapX realized the value it could add by providing a flexible and customized financing solution. CapX looks forward to supporting Gehl’s growth needs and is a proud financing partner to Gehl’s soon to be upgraded manufacturing and distribution process.”

Founded in 1999, CapX Partners (CapX) is a specialty finance company that focuses on private equity and venture backed portfolio companies looking for debt financing in the $2-­$20 million range. CapX provides senior and mezzanine debt including lease lines and favors manufacturing, distribution, technology, energy and healthcare industries with an emphasis on revenue-producing fixed assets. www.capxpartners.com.

 


COMPANY NEWS 
Scargo Hill Capital Co-Founder Helps Foster Community and Social Responsibility through Education and Mentoring Programs
Scargo Hill Capital, LLC, an institutional asset manager focused on providing asset-based, senior secured direct lending to the retail and consumer product sectors, today shared the recent formation of SLC Pay It Forward, Corp., a non-profit founded in memory of Stewart L. Cohen (1954-2016). Led by Andy Moser, Jacen Dinoff and the Cohen family, SLC Pay It Forward’s mission is focused on three core concepts: goodwill, mentorship, and education.

“Nobody has influenced my life more in the last 25 years than Stewart Cohen,” said Mr. Moser, managing partner and chief executive officer, Scargo Hill Capital. “He was a friend and a mentor, someone who taught me so much throughout my career. It is my obligation and honor to ‘Pay It Forward,’ which is why I led the formation of the non-profit in his honor.”

SLC Pay It Forward engages in activities such as raising and providing funds to increase endowments in fields of study and for venues (e.g. education facilities) for the purpose of promoting the activities in and around corporate renewal. The organization will actively seek to further the education of corporate recovery industry professionals and provide a vehicle for connecting successful executives with qualified students to provide mentorship, internships and potential employment.

Working with Northeastern University, Stewart’s alma mater, SLC Pay It Forward will also aim to arrange co-op opportunitiesfor those interested in pursuing a career in finance, specifically restructuring and corporate renewal.

As part of Scargo Hill’s efforts to support corporate restructuring and retail industry education programs, Moser often participates in events hosted by the University of Georgia’s Entrepreneurship Program, housed in the Terry College of Business, and the University of Florida’s David F. Miller Retail Center at the Warrington College of Business.

In 2016, Moser was asked to join and appointed to the Advisory Board of “Let’s All Do Good,” a mobile platform that enables organizations to reach their supporters and empowers them to be more actively engaged in their cause in the community. “My passionate belief is that all people want to do something good and this could not align more perfectly with the founding beliefs behind such a great initiative poised to help bring people together,” Moser added.

Scargo Hill Capital is an institutional asset management platform focused on providing senior secured direct lending to lower middle-market companies across retail, consumer products and the broader supply chain. Scargo Hill offers working capital solutions that provide maximum liquidity and flexibility with the goal to help its borrowers and investors achieve their goals. The firm ideally targets transaction sizes under $25 million but will consider larger, value-add transactions. www.scargohillcapital.com
 
Phoenix Capital Group is Promoting Freight Bill Factoring and Giving Away Yetis at the Mid-America Trucking Show 2017 at booth #69089
Representatives from Phoenix Capital Group headquarters in Scottsdale, Arizona as well as the Birmingham, Alabama office will be attending the Mid-America Trucking Show March 23rd through the 25th, 2017. Located in the West Wing, booth #69089, Phoenix Capital Group representatives will be awaiting the arrival of over 70,000 independent truck drivers. Information regarding freight bill factoring, equipment financing, fuel card programs, and more will be available to all truck drivers.

Phoenix Capital Group representatives will be giving away a Yeti Hopper to one lucky truck driver; stop by booth #69089 to enter to win! Independent truck driver can also let Phoenix Capital Group representatives know they will be stopping by the booth for a special gift by clicking here. Each year Phoenix Capital Group attends a trucking trade show; representatives give away fun, special gifts to all loyal clients, social media followers, and new friends.

Phoenix Capital Group is eagerly waiting to fly out to Louisville, Kentucky to meet each independent truck driver attending the Mid-America Trucking Show 2017. Be sure to sign up for a special gift that you can pick up March 23d through March 25th at booth #69089 in the West Wing.

Phoenix Capital Group is an industry leading provider of transportation financing services for trucking companies in the United States. Headquartered in Scottsdale, Arizona, Phoenix Capital Group also maintains regional offices in Texas, Alabama, and Tennessee. Phoenix Capital Group offers a powerful array of transportation services including recourse freight factoring and non-recourse freight bill factoring, equipment financing, fuel card programs and a free online load board service. www.pcgfactoring.com