Sale of Holiday Decorations to Major Retailers

Type of Deal: Cross Border Production Financing
Deal Size: $2,500,000
Funding Requested: Cash Funding

Two years ago an asset based lender introduced King Trade Capital to a specialty manufacturer of holiday decorations. The company has corporate offices in Massachusetts, a distribution plant in Brownsville, Texas, and a production facility in Matamoras, Mexico. The lender referred this client to KTC because of KTC’s funding capacity and expertise in structuring and funding complex transactions as well as the lender’s knowledge and confidence that KTC only provides PO financing not A/R financing.

The client’s business has always been seasonal with the bulk of sales in the last quarter of each year during the holidays. Not only were the company’s sales very seasonal, but sales were growing at a faster pace. Therefore, the client needed a funding solution to handle the problem. The first call the lender made was to King Trade Capital to provide a flexible form of purchase order financing that could quickly accommodate the growth.

When the client came to KTC they had a myriad of funding needs to fulfill seasonal orders. They were shipping finished goods from China and the U.S., as well as raw material from China, Mexico, and the U.S. to be assembled in Matamoras, Mexico and then shipped to Brownsville, Texas for distribution to major retail chains. The client’s issue was coordinating and timing the acquisition of the various material, providing payment to suppliers, and having working capital for the production in Mexico and the increased storage and warehouse need in the distribution center.

KTC was able to provide a quick solution. We used our market knowledge to learn about the client and the transaction. The client had very good products, an excellent track record with many years of experience, and good relationships with both suppliers and customers. KTC was able to assess the client’s ability to manage the complex process and implemented a secure structure closing the transaction quickly.

In addition to quantifying the client’s ability to perform, KTC also confirmed all costs and the various funding needs required to fulfill the orders, arranged letter of credit financing to overseas suppliers, provided credit to several domestic suppliers, and provided operational costs to the client.

By providing multiple funding solutions and operational support, KTC’s funding allowed the client to continue to grow and accept orders the client otherwise would not have been able to fulfill. Having provided funding to this client for two full seasons, the client is now realizing record revenues and getting product into more retail outlets demanding their products. Without the funding of KTC, this would not have been possible.