Specialized Packaging Group L. P.

Introduction

Specialized Packaging Group L. P. (SPG), based in Canada, is a leader in the design and manufacture of customized industrial packaging. Founded more than 40 years ago, the company prides itself in being able to offer ‘the most complete line of services in the packaging industry.’ With subsidiaries in the U.S., Mexico, France and Germany, the group sells to customers all over the world from small businesses to large multinationals.

Challenge

SPG needed to replace their existing syndicated credit facility with a new lending arrangement. The goal was to streamline the business, divest non-core activities, and reduce overall liabilities. In order to do so, they needed additional availability to pay-off their existing debt and required a flexible lender who could handle the complexity of the transaction, which involved many creditors and overseas assets.

Solution

FGI was introduced to SPG by their turnaround consultant, MNP Corporate Finance. FGI was brought into the deal specifically to finance SPG’s subsidiary in Mexico. Having financed many transactions in Mexico, FGI possessed the expertise required to structure the transaction locally.

After beginning their due diligence on SPG, FGI realized that it would be in the company’s best interest to refinance all of their debt, not just that of their Mexican subsidiary. To this end, FGI partnered with a prominent asset based lender to finance the Canadian and US portion of the transaction. As for the Mexican subsidiary, FGI was able to leverage their accounts receivable and provide them with an additional $10m in availability against a pool of collateral that until then had remained untouched.

Results

By leveraging the Mexican subsidiary’s accounts receivables and inventory, FGI was able to structure a facility, free of covenants and tailored to the SPG’s borrowing needs. As a result, the company was able to pay off their existing lenders and obtain an ABL facility that gave them the financial flexibility to move the company forward.