US Acquisition US $72,500,000 Financing Deal for an Oil and Gas Services Company
Callidus provided the purchasers of a U.S. based oil and gas services company ("Serviceco") with an operating line of credit of US $12,500,000 (secured by working capital assets) and a term loan of US $60,000,000 (secured by machinery and equipment). The proceeds were used by our client to assist with purchase of the shares of Serviceco, and fund ongoing working capital so the business could realize Serviceco's turnaround.
Serviceco had a successful history of operating and financial performance. However, a decision by the prior owners to reposition its service fleet caused a decline in performance as utilization dropped during the transition period. This decline in performance meant the existing senior bank lender was not prepared to support the new owners looking to acquire the business.
The company had already proceeded with another lender for financing the acquisition; however, this lender could not close the transaction. The buyers of Serviceco approached Callidus to determine if we could step in and provide the acquisition financing.
The Serviceco buyers required a lender which was comfortable with leveraging the assets of the company, and had the insight to understand what caused the downturn in the performance of the company, and see the turnaround. Callidus stepped in and closed the financing in seven weeks. As the company wanted a committed financing facility for two years, Callidus was able to structure financial covenants that fit with the company's forecast. Callidus was able to offer a principal repayment holiday on the term loan to take the pressure off the company's cash flow allowing the new owners to focus on the operations of the business following their purchase. Principal repayments on the term loan were tied to the depreciable life of the equipment, affording additional relief to Serviceco's annual debt repayment obligations. Serviceco's CFO affirms, "Callidus was able to structure a financing program catered to our needs - something that no other lender could do. The responsiveness with which Callidus put together the financing program meant that we didn't skip a beat in our acquisition plans."