Celtic Capital Stays in for the Long Haul

The Company
This Pennsylvania Company, founded in 1995, manufactures wood veneer sheets and edge banding products used in furniture and doors. An acquisition of another manufacturer resulted in a second location of this Company in Washington.

The Situation
As a result of losses and the company’s failure to comply with covenants, its bank asked the Company out. In addition to the bank loan, the Company had an SBA loan and additional loans with three economic development groups in Pennsylvania. The Company was also delinquent on its rent at the Washington location and given the total picture, was looking at a complete debt restructure.

The Solution
Celtic Capital was brought into this deal by an intermediary. Negotiations with the bank, SBA and economic groups were all complicated and took time. The original intent was for the SBA to stay in as it agreed conceptually to a restructuring, however, actually getting it to sign a subordination agreement proved to be too difficult and time consuming. Celtic Capital and the owner switched gears and negotiated a payoff with the SBA instead. Celtic Capital then provided a $2.455MM financing facility with A/R, Inventory and Term Loan components.

The Result
With all of the negotiations, this deal took over one year to close. According to Mark Hafner, President and CEO of Celtic Capital, “We knew from the onset that this deal had a lot of moving parts and was not going to be easy, however, the deal had merits, the owner was actively involved, and by focusing on the bigger picture, we saw it through.” He continued, “We don’t shy away from the difficult deals. When we see merit in a business plan and the ability of the business owner to carry it out, we’ll help out even though it may be a long, rough road.”