Drake Waterfowl Systems sought financing last year to pursue a complicated reorganization and expansion. The Mississippi-based maker of outdoor sportswear was looking to buy out a joint venture partner that had helped the company source its manufacturing and distribute its products, in order to switch to a fulfillment provider more capable of supporting the company's growth.
The deal presented a challenging set of circumstances for potential lenders. Although the move made good strategic sense given the company's long-term goals, in the short term it meant a certain loss of continuity and required Drake Waterfowl to rebuild its finance team, as key members resided with the joint venture partner. What's more, Blackhill Partners, the investment bank the company hired to advise on the restructuring and procure the financing, was asking for an accelerated due diligence process and faster-than-typical loan decision. Most in the field of potential lenders balked.
Bank of America Merrill Lynch, Drake Waterfowl's primary treasury management bank, responded differently. The bank dug into the details of the deal, saw the strength of the company's plan for growth, and delivered a financing proposal for a $30-million asset-based loan, demonstrating flexibility and a willingness to accommodate the company's needs, says Lance Gurley, a director at Blackhill Partners. "Their willingness to work on what was important to us really put them on a different trajectory from the other lenders," Gurley says.
Blackhill Partners, which had temporarily taken over the company's finance function, provided the same data to all the lenders competing for the business, including several other large national banks. However, only Bank of America Merrill Lynch did the intensive research that was necessary to allow it to fast-track its due diligence process and meet Blackhill's timing needs.
"With its streamlined, local approval process, Bank of America Merrill Lynch was able to provide the committed financing when we needed it," Gurley says. "And the others couldn't."
The bank had to quickly do the research necessary to get comfortable with company management taking over key functions the joint venture partner had previously handled, as well as with Blackhill's ability to put a talented corporate finance team in place. "We were creating a new company in many respects," Gurley says.
Bank of America Merrill Lynch's bankers were willing to work over a holiday weekend, since Drake Waterfowl had a deadline to pay the joint-venture seller. The bank addressed other needs specific to the company's industry, such as structuring into the loan a seasonal over-advance to provide additional working capital to support seasonal spikes in sales.
"Bank of America Merrill Lynch's responsiveness came from investing the time necessary to develop a deep understanding of Drake Waterfowl's business and confidence in its plan for growth," says Joe Stone, managing director at Blackhill Partners.
Meeting a borrower's specific needs
Mark Champion, a senior vice president at Bank of America Merrill Lynch who worked on the deal, says the bank looks to address each client's specific needs and to provide a world-class experience from start to finish. "We strive to simplify the underwriting and closing process and to make on-boarding as seamless as possible," Champion says.
That level of service continues after the transaction is inked. Gurley says Drake Waterfowl has recently been working through a change in warehouse providers that involves moving inventory that comprises virtually all of Bank of America Merrill Lynch's loan collateral. He says the bank has been supportive, keeping tabs on the process without hindering it.
"Post-closing they've been great,” Gurley says. "If we have an issue, we call them and they respond immediately."
Case studies are for illustrative purposes only and intended to demonstrate the capabilities of Bank of America Merrill Lynch. You should not consider these case studies as an endorsement of Bank of America Merrill Lynch. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Results may vary.
- Drake Waterfowl's expansion goals could be realized by working with a bank that demonstrated a deep understanding of their business and long-term goals.
- Working with an ABL lender that demonstrates flexibility and a willingness to accommodate a company's needs is critical.
- Having a streamlined ABL approval process can be paramount in having a successful outcome.