Maximizing Proceeds Leveraging Owner-Occupied Real Estate: A Case Study
One of only four vertically-integrated pressure control oilfield equipment manufacturers globally that offers both industry-required capital equipment and elastomeric products, Integrated Equipment, Inc. (Integrated) designs, manufactures, distributes and services equipment for oilfield services clients globally. Clients include well servicing contractors, rental tool companies, land and jackup drilling contractors, as well as major and independent oil companies.
During 2015-2016 the oil and gas industry experienced the worst downturn in 75 years as a result of oversupply, causing slumping oil prices. Market participants faced lower margins, decreased profitability, and impaired cash flow, forcing a large number of oilfield services companies into bankruptcy and destabilizing major players. Capital providers jettisoned the space, and many companies were left without working capital. Integrated formulated a repositioning plan including lean inventory management, a global footprint and a new focus on maintenance and replacement products, but needed working capital.
Veritas Financial Partners provided a $9 million credit facility against the company’s assets, including domestic and foreign accounts receivable, inventory, machinery and equipment, and owner-occupied real estate. The financing will be used to pay existing indebtedness, provide working capital for future growth, and enable Integrated to continue implementing their repositioning plan.
With working capital and restructured financing, Integrated is now better positioned for profitable growth in an unpredictable market. With their repositioning plan in place they have implemented leaner, efficient real-time inventory; improved supply chain performance; expanded their offering to include replacement parts; and established a global support network. As a result, they have less exposure to the volatility of the market and are less dependent on revenue from new drilling. In addition, they can capture revenue from providing products and services throughout the life cycle of the equipment.
About Veritas Financial Partners
Veritas Financial Partners is a specialty finance firm that provides $2 – $20 million senior secured credit solutions to businesses across various industries. Veritas serves entrepreneurs, management teams and private equity sponsors by delivering the flexible, responsive capital needed to achieve their goals. As an affiliate of an investment fund with $2.5 billion in assets under management, Veritas benefits from a substantial long-term capital base.