Situation
This contract laminating and coating manufacturer was founded in 1992 as a family-owned business serving the southeastern United States. In early 2025, the company was acquired by a private equity group. As the new ownership began to ramp up production, orders from key customers were put on hold due to tariffs and general market uncertainty.
This reduction in revenue, coupled with acquisition costs and mezzanine debt interest, resulted in a significant net loss in 2025… but because customers quickly began to return and 2026 projections appeared favorable, the company approached their bank for a working capital line of credit.
Due to the previous year’s net loss and the lack of a personal guarantor, the bank was unable to move forward. In order to avoid losing the deposit relationship and provide an alternative lending solution, the bank recommended Magnolia Financial.
Solution
With extensive experience providing non-dilutive working capital to companies owned by private equity, Magnolia Financial understood the company’s financial position and the cause of the short-term reduction in its performance. Within 48 hours of the initial meeting, we were able to extend the company a $500,000 Accounts Receivable Line of Credit with no personal guarantees.
The Magnolia Financial credit facility was priced significantly lower than the mezzanine term debt and did not further dilute the new ownership. The additional liquidity allowed the company to hire new workers and buy the necessary raw materials to meet the customer demand that is coming back online. As a result, the company is projecting record EBITDA for 2026.
