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Asset Based Lending
Economic cycles, global competition and commodity price volatility can create special challenges for companies that manufacture and distribute a broad range of products. We work directly with you to develop financing solutions that address your operating needs and support your strategic goals at every stage of the economic cycle.
Our experienced professionals take an advisory approach, looking at your company's entire capital structure to identify the best means of leveraging its assets. By performing this analysis up-front, we are able to provide capital market and secured lending solutions that address your operating needs and help you capitalize on growth opportunities.
Our team of finance professionals offers a full complement of asset based lending solutions to companies throughout Canada, with a transparent link to the U.S. market, through Harris Nesbitt (our U.S.-based investment banking arm) for your cross-border requirements. Whether you need funding for acquisitions, a turnaround, or to meet seasonal working capital requirements, you can count on us to meet our commitments and help you achieve your objectives.
BMO Bank of Montreal’s Asset Based Lending group provides mid-market companies with committed revolving lines of credit and term loans from $10 million, with higher advance rates than loans normally made by other banks and with no leverage covenant!
Our full service offering combines the benefits of asset based lending with the full suite of BMO products – a combination not available from other ABL providers.
Our team of experienced corporate finance professionals located in Vancouver, Calgary, Edmonton, Toronto, Montreal and Halifax work hard to meet your financial needs.
What's New
Refinancing - $22,600,000 Operating Facility
This savvy retailer, with head office in Montreal and important store presence across the country, was already an advocate of Asset Based Lending, recognizing the greater leverage that ABL lending values allowed them to access while freeing them of traditional financial covenant requirements. The Company awarded BMO the refinancing opportunity based on our uniquely customized solution: an ABL revolving line of credit, an un-margined Seasonal Facility, an un-margined Treasury Risk Management Facility, bundled with the most competitive Trade Finance and Cash Management products, gave them the optimal platform from which to manage their seasonal needs while they continue to pursue their growth objectives.
Find out how we have helped clients with solutions to address their operating needs and capitalize on growth opportunities.
- Private Equity Sponsored Refinance - $15,085,000 Operating & Term Facilities
- Acquisition Financing and Growth - $8,600,000 Operating and Term Facilities
- Refinancing - $35,000,000 Operating & Term Facilities
- Turnaround – BMO Agents US $52,000,000 Operating & Term Facilities
- Growth - $32,000,000 Operating Facility
- Growth and Recapitalization – BMO Agents $90,000,000 Operating & Term Facilities
- MBO and Privatization – BMO Agents $70,000,000 Operating Facility
- Growth - $13,000,000 Operating & Term Facility
- Private Equity Sponsored Acquisition - $13,000,000 Operating Facility
- Rapid Growth - $18,000,000 Operating and Term Facilities
- Turnaround - $36,600,000 – Operating and Term Facilities
- Growth - $12,000,000 Operating Facility
- Rapid Growth - $20,000,000 Operating Facility
- LBO & Turnaround - $8,000,000 Operating & Term Facilities
- Management Buyout - $19,000,000 Operating, Term and Subordinated Debt
- Rapid Growth - $25,000,000 Operating Facility
- Restructuring - $43,000,000 Operating Facility
- Restructuring - $18,000,000 Operating Facility
- Succession - $7,000,000 Operating Facility
- Turnaround - $11,000,000 Operating and Term Facilities
- Refinancing - $15,000,000 Operating Facility
Private Equity Sponsored Refinance - $15,085,000 Operating & Term Facilities
This Ontario based
manufacturer was acquired by a private equity firm two years ago. The initial
acquisition was financed with a traditional senior debt. Softer than expected
sales caused lower net earnings, and the company was projecting breaches of its
conventional lending covenants. This resulted in the sponsor seeking an
alternate longer-term financing solution. BMO Asset Based Lending provided
credit facilities to refinance the existing lending syndicate. The ABL structure
included a debt servicing test that was based on the proforma debt with a reset
amortization of the term loan and no leverage covenant. This stable structure
provided flexibility for management to focus on increasing sales and completing
their turnaround strategy.
Private Equity Sponsored Acquisition and Turnaround - $48,000,000 Operating Facility
This South-western Ontario based manufacturer had significant losses for the past four years, primarily due to plant restructuring and consolidation. The acquirer, a US equity sponsor, required a cross border financing solution that leveraged the strong asset base. BMO Asset Based Lending provided 50% of the credit facility. The structure included a debt servicing test that grows to 1:1 within the first year and amortizing advances on fixed assets to bridge the working capital requirements. It provided flexibility for management to complete their turnaround strategy and a stable long term (5-yr) capital structure.
Acquisition Financing and Growth - $8,600,000 Operating and Term Facilities
This niche player in the chemical distributions industry was undertaking considerable growth plans, including product diversification. An oil and gas services company, with similar strategic goals, was pursuing the acquisition of a material equity position in this niche player. Under the conventional lending arrangement, the combined company was limited by leverage covenants and availability. BMO Asset Based Lending provided greater working capital availability and eliminated the leverage covenants, which permitted the company to finance the business combination and provide room for organic growth. The structure effectively minimized the equity contribution required and resulted in enhanced return on equity.
Refinancing - $35,000,000 Operating & Term Facilities
This food and beverage company was unable to execute its growth strategy due to financial leverage constraints. The company obtained the necessary capital to pursue its expansion plans through an ABL restructuring which eliminated the leverage covenants and focused on the inherent value of the company's assets.
Turnaround – BMO Agents US $52,000,000 Operating & Term Facilities
This Canadian based manufacturer of lumber products was experiencing some difficulty in accessing working capital based upon conventional leverage covenants. BMO Asset Based Lending restructured the facilities and agented an ABL deal to provide a significant increase in availability. The new facilities have only one financial covenant and provide a more stable capital platform for the company.
Growth - $32,000,000 Operating Facility
This market leading distributor required additional working capital to fund growth, acquisitions and repatriate funds to its parent. BMO Asset Based Lending structured a facility with no leverage covenant that opened up significant availability. The facility was originally $22,000,000, but an additional need for funding was presented soon after the initial funding. BMO Asset Based Lending completed a $10,000,000 facility increase to fund a strategic acquisition. The increase and amendment were completed in less than four weeks from the date the acquisition was made public.
Growth and Recapitalization – BMO Agents $90,000,000 Operating & Term Facilities
This established Canadian subsidiary of a multinational company was experiencing sales growth in its various business operations worldwide, including its profitable steel service centres. As the business is commodity-based and cyclical, management felt conventional leverage covenants could hinder the company from accessing the increased working capital required during the low part of the cycle, despite having significant assets. BMO Asset Based Lending, as lead agent, structured the syndicated facilities with no leverage covenant, which provided a significant increase in availability resulting from high inventory and real estate values. The facility also enabled capital repatriation to the parent. The company is expected to achieve significantly higher return on equity under the new capital structure.
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MBO and Privatization – BMO Agents $70,000,000 Operating Facility
Key management of this public company auto parts manufacturer sought to privatize the company through a leveraged management buyout. The company operates primarily in Canada and the United States and serves the OEM and aftermarket segments. BMO Asset Based Lending, as lead agent, structured the syndicated operating facility that offered limited financial covenants and provided the new entity with the financial flexibility required to achieve their goals.
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Growth - $13,000,000 Operating & Term Facility
This Canadian based manufacturer of mining and oilfield equipment components was experiencing some difficulty in accessing working capital based upon conventional leverage covenants. BMO Asset Based Lending restructured an Operating and Term Facility that replaced leverage covenants and provided a significant increase in availability resulting from leveraging the company’s fixed assets to fund organic growth.
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Private Equity Sponsored Acquisition - $13,000,000 Operating Facility
BMO ABL was approached to provide partial funding for this equity sponsored transaction between a national distributor of graphics and a graphic equipment supplier. BMO structured an operating facility with no leverage covenant that allowed significant availability to be generated from the company’s working capital assets. This effectively minimized the equity capital contribution required to be invested by shareholders to facilitate this transaction.
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Rapid Growth - $18,000,000 Operating and Term Facilities
This Canadian based supplier of agricultural products was faced with significant US sales expansion in the near term while undergoing a major reorganization of its business. Covenant flexibility was required due to price volatility of their commodity based inventory. In addition to providing the credit facility, BMO Asset Based Lending provided fully integrated banking services including cash management, treasury and trade finance for both the Canadian and US operations.
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Turnaround - $36,600,000 – Operating and Term Facilities
This well established manufacturer encountered several one-time external events which significantly reduced EBITDA and caused covenant defaults, including debt service which dropped below 1:1. Cash flow was impaired by commodity price fluctuations, energy shortages and foreign exchange volatility. The ensuing strain on gross margin required the company to fully utilize its operating line with little working capital left to finance raw materials and capital expenditures for the next season. BMO ABL structured a revolver and term facilities which significantly increased both the credit limit and availability of funds. The structure included a stretch piece to bridge the working capital requirements until the end of the inventory build cycle and support the company during its turnaround. The restructure has provided the flexibility and time for the company’s management to execute their turnaround strategy.
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Growth - $12,000,000 Operating Facility
Conventional leverage covenants hindered this services company’s ability to access the increased working capital it required to sustain the steady level of growth it had experienced in the last three years.
BMO Asset Based Lending structured an operating facility with no leverage covenant, and increased the operating facility by 50% which created sufficient additional availability to fund organic growth and growth through acquisition, while allowing the owner to repatriate a portion of the shareholder loans which were no longer required to maintain leverage ratios.
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Rapid Growth - $20,000,000 Operating Facility
This processor and distributor of nutritional supplements saw sales growth of 92% in 2004 and faced increasing debt levels primarily due to plant expansions and the increased product demand. The resulting high leverage strained the relationship with its senior debt lender. BMO Asset Based Lending restructured an operating facility that replaced leverage covenants and provided a significant increase in availability resulting from high inventory recovery values.
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LBO & Turnaround - $8,000,000 Operating & Term Facilities
This late-stage turnaround company is a manufacturer of steel components. BMO Asset Based Lending provided leveraged acquisition financing supported by all of the company’s assets, including real estate and machinery and equipment.
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Management Buyout - $19,000,000 Operating, Term and Subordinated Debt
The management of this profitable steel service centre sought to acquire the division, at the same time as the parent filed for Chapter 11 in the United States. BMO Asset Based Lending structured operating and term facilities, which together with BMO Capital Corporation’s $4,000,000 subordinated debt investment, assisted management in a leveraged buyout of the Canadian operations.
Rapid Growth - $25,000,000 Operating Facility
BMO quickly realized that a committed asset based facility was the most appropriate form of senior debt financing to accommodate this building products distributor with high leverage, rapid growth and a requirement to carry a significant amount of inventory throughout the year. The increased availability, gained by higher advance rates on inventory, from the asset based credit facilities enabled the customer to double their sales, well in excess of $100 million, and quadruple their profits within twelve months.
Restructuring - $43,000,000 Operating Facility
This high volume, low margin specialty distributor was faced with increasing debt primarily due to fixed overheads, after a downturn in the market it serves. The resulting high leverage strained the relationship with its senior debt lender. BMO Asset Based Lending restructured an operating facility that replaced leverage covenants with a focus on the underlying value of the collateral.
Restructuring - $18,000,000 Operating Facility
This specialty retailer made several acquisitions that led to a significant accumulation of debt. High leverage and a period of underperformance of certain stores caused the North American retailer to run into difficulties with its senior lender. BMO Asset Based Lending was able to structure an operating facility with fewer covenants that allowed the company time to restructure its operations. Today, the company is one of Canada’s largest specialty retailers, operating over 300 stores in Canada and the United States.
Succession - $7,000,000 Operating Facility
The founding shareholders of this food distributor had grown the company to over $150 million in revenues and were at the point where they wished to retire and withdraw their equity from the company. The succession plan was to sell the company to existing senior management; however, they lacked the financial resources to complete the transaction. By leveraging up the accounts receivable and inventory, beyond the levels that are offered by conventional banking facilities, BMO Asset Based Lending structured facilities that permitted the succession plan to become reality.
Turnaround - $11,000,000 Operating and Term Facilities
A significant downturn in the electronic industry caused this public company to be at risk of breaching their traditional senior debt covenants. The Asset Based Lending group structured a facility that eliminated traditional loan covenants and focused on the value of the underlying collateral. By understanding the client's turnaround plan we were able to support this long-standing client through a challenging period. As their financial position continues to improve, should they wish to transition back to the traditional bank, all early termination fees will be waived.
Refinancing - $15,000,000 Operating Facility
Rapid growth and the need for a lender with comprehensive cash management and treasury offerings, caused this distributor of home entertainment products to seek a solution that was not provided by its existing asset based lender. BMO Asset Based Lending refinanced the companies operating facility and made available a full complement of products and services to meet the clients needs.
The Next Step
Contact one of our experienced finance professionals.
Canadian Team
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