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Oil and Gas Case Study

Problem: Gulf Coast Business Credit was referred to an oilfield service company located in Houston, Texas that had a large concentration ($1.6MM) in Lyondell (pre-bankruptcy) receivables with a total facility size of $3.5MM. The oil company was transitioned into the bank’s special assets department a month after the announcement of the Lyondell bankruptcy. The oil company was on the verge of bankruptcy at this point as well, they could not cover payroll and the bank was not willing to provide additional availability.
Solution: GCBC worked with the oil company and the special assets division of the bank to pay down the line of credit by utilizing receivables other than Lyondell to immediately reduce the bank’s exposure. The bank termed out the Lyondell portion of the line and entered into an intercreditor agreement with GCBC where GCBC held back 4% of each funding to the oil company which was wired directly to the bank monthly in addition to the monthly term payment made by the company until the bank was paid off in full.
Amount: $1.6MM

Problem: Gulf Coast Business Credit was approached by a banker in Dallas, TX with a distribution company that had a $13MM factoring facility request and an $8MM concentration with a single debtor. This was a profitable company who had been in business for more than 10 years. A competing asset-based lender refused to help them, and the distributor was now struggling to put a working capital facility in place before the holiday season was upon them. The company had a significant amount of purchase orders and had doubled their revenues year after year without fail.
Solution: GCBC brought together a team of banks with factoring divisions to participate in this factoring opportunity. GCBC holds $3MM of this factoring facility while the bank that referred the deal won the depository and ancillary services.
Amount: $3MM

Problem: A service company that provides virtual call centers with a unique business plan that utilizes call center agents who work from home came to Gulf Coast Business Credit for help with a new contract. This service company signed a contract with a telecommunications provider that requires them to hire, train and staff 250 home-based customer service representatives.
Solution: Since this immediate expenditure went beyond the financial scope of the service company’s traditional banking line of credit, they sought a factoring company to support them in this new contract. GCBC was able to partner with the service company’s bank to structure an arrangement where GCBC factored only the receivables of the new contract, providing a much needed instant cash flow enabling the service company to hire and train their new staff immediately.
Amount: Cash flow to hire, train and staff 250 home-based customer service representatives

Problem: Gulf Coast Business Credit was approached by a banker in New York, NY with a staffing company that had a $2MM factoring facility request, in business less than two years with a large debtor concentration that only paid invoices on 60 day terms. This company was on track to double their revenues during the second year of business without much diversification in their client base. Due to significant growth and extended payment terms, ongoing financial commitments became a challenge.
Solution: GCBC was able to come in quickly and provide a factoring facility that allowed the company to continue to expand while meeting their financial obligations. Since the closing, this company has also begun to diversify their client base and should be in a position to begin looking for a traditional bank facility within the next six months to a year.
Amount: $2MM working capital facility