Success Stories

Featured Success Story: Leading Industries Inc.

$11 million debt restructing worldwide corporate headquarters

Transaction Overview:

Leading Industries Inc. is a privately held plastics manufacturer based in Oxnard, California. While they had a longstanding track record of success, recent economic challenges in the US and global economy caused the company to experience lower than expected revenue and net income figures. In 2006 they built a 175, 000 square foot Industrial building that was built specifically for their manufacturing needs. This asset was deemed a single, special use asset by the lending community. They were seeking $11million to refinance the asset.

Challenges:

There were a significant amount of challenges associated with this transaction. The challenges were severe enough to lead one of the nations leading capital sources to state that this deal could not be financed in the current capital market environment. The fact that this was a single tenant building over 100,000 square feet and was built to suit a manufacturing company represented the first challenge. Local market metrics were trending in a negative direction in virtually every major area, including rental rate reduction and significant reduction in value. The cash flows were down and the debt obligations had risen drastically. The debt leverage level was 3x’s the industry average and the cash flow coverage ratio was well below the standard requirement of 1.10-1.20%. The final challenge was associated with revenue concentration as fifty-nine percent of the companies were generated from one non-credit customer.

Solution:

The successful execution of this transaction is a result of StrongTower Capital’s unique capabilities and expertise. On the surface, this situation appeared to be next to impossible as none of the standard lending requirements were met. However, StrongTower Capital looked beyond the black and white, beyond the numbers and gained a detailed understanding of the clients business and the real estate assets. In addition, we gained specific knowledge about the industry including future trends, risk factors, and critical success factors. We incorporated this knowledge with our deep capital market expertise, local market knowledge, and vast network of capital sources to position all of the strengths of the clients business while mitigating the risk factors. We communicated with executive level members of the capital source to ensure that the deal was executed as promised.