Aerospace

  • Type: Acquisition Financing
  • Structure: Second Lien Term Loan and Direct Equity Investment
  • Date: 2016
  • Location: Seattle, Washington
  • $10,000,000

Situation:

An Oklahoma-based independent sponsor was seeking capital to effectuate the acquisition of an aerospace engineering firm focused on the development, certification and supply of certified performance improvement systems for commercial and general aviation aircraft worldwide.  The independent sponsor brought significant value through their extensive aerospace experience, a solid operational track record and meaningful skin in the game in the form of cash equity invested.

Congruent structured a $10,000,000 investment comprising a second lien term loan and an equity co-investment, providing significant flexibility in order to reduce the debt service burden on the business and instead allow for future excess cash flow to be reinvested for growth.  Congruent’s prior expertise across multiple aerospace transactions was value-add throughout the underwriting process.

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Business Services

  • Type: Acquisition Financing
  • Structure: Second Lien Term Loan
  • Date: 2016
  • Location: Baton Rouge, Louisiana
  • $15,600,000

Situation:

The company is a 50-year old, family-owned business that provides various engineering and construction services to the chemical, oil & gas, and power industries. The financing funded the acquisition of a specialty welding firm, which expanded and diversified the company’s service offering. The family chose to finance the acquisition with mezzanine debt rather than a dilutive equity raise.

Congruent provided a second lien term loan structure that sits behind the senior lender’s asset-based revolver in the capital structure. While the company is paying traditional mezzanine economics, the family avoided the more expensive dilution that would have come with an equity raise. Congruent is protected through its secured position and covenant protection in the credit agreement.

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Energy & Natural Resources

  • Type: Acquisition Financing
  • Structure: Second Lien Term Loan
  • Date: 2015
  • Location: Amarillo, Texas
  • $6,000,000

Situation:

The company is an owner-operated business that provides specialty chemicals to both upstream and midstream operators in the oil and gas industry, with a focus on stimulating production, water treatment, and hydraulic fracturing. The company sells its chemicals to firms in Texas, Oklahoma, New Mexico, and Colorado. In the midst of a sharp downturn in oil and gas prices, the company sought approximately $6 million of growth capital to fund a strategic acquisition in the Permian Basin of Texas.

Congruent invested in a second lien term loan, positioned behind the senior lender’s asset-based revolver in the capital structure. Congruent’s capital enabled management to continue their growth strategy and take market share during the downturn in the commodity cycle. Congruent’s position was supported by the company’s strong customer relationships, superior chemical formulations, and modest leverage.

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Restaurants

  • Type: Growth Capital
  • Structure: First Lien Term Loan and Equity
  • Date: 2015
  • Location: Grand Rapids, Michigan
  • $25,000,000

Situation:

An owner operator of nine restaurants was seeking to expand into neighboring states throughout the Midwest. The company had built an exceptional brand in its market with a unique customer experience, award winning food and outstanding service, garnering a loyal following in the region.

Congruent structured a $25,000,000 investment, comprising a first lien credit facility, delayed draw facility, and equity co-investment. The delayed draw mechanism was highly customized to the specific borrower, providing significant flexibility for the company to draw additional capital as needed for future store growth.

Due to the asset-lite nature of the industry combined with the growth strategy, the company’s traditional bank lender was unwilling to fund the necessary growth capital. Congruent was able to structure a debt and equity solution that minimized dilution, while still achieving ownership’s growth objectives.

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Technology & Software

  • Type: Refinancing and Growth Investment
  • Structure: First Lien Term Loan and Preferred Equity
  • Date: 2013 and 2015
  • Location: Dallas, Texas
  • $14,650,000

Situation:

An owner-operated, software-as-a-service provider to automotive dealerships was seeking to refinance an existing senior secured term loan.  The company, with its long operating history and strong management team, is a leader within it niche, with an approximate market share of over 30%.  The company sought a lending partner that had the interest and ability to grow with the company over the coming years.

Congruent initially funded a $5,000,000 senior secured term loan for the refinancing.  After building a strong relationship over the next 18 months, the management team approached Congruent about an exciting new growth opportunity it was considering. After thorough diligence, Congruent upsized its existing term loan and made a preferred equity investment to fund the growth.

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Cable & Telecom

  • Type: Refinancing and Growth Capital
  • Structure: First Lien Term Loan
  • Date: 2013 and 2015
  • Location: Atlanta, Georgia
  • $41,000,000

Situation:

A leading provider of broadband communication services (video, internet, and phone) to a growing suburb of Atlanta, Georgia was looking to refinance its existing indebtedness and raise additional capital to fund the conversion of its network from analog to digital. Creating a digital network was a key growth opportunity for the company, as it allowed for an increased number of high-definition cable channels and higher speed data products.

Congruent co-invested alongside a long-time partner in a $36,000,000 first lien term loan. Congruent was comfortable with the investment due to the recurring revenue dynamics, growing population in the company’s local market area, and the sponsor’s equity thesis.

Given the stable financial performance since close and the attractive growth prospects, the lender group upsized the first lien term loan by $5,000,000 in January 2015, to repay a portion of the outstanding subordinated debt and fund an expansion of the company’s network.

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Distribution

  • Type: Acquisition Financing
  • Structure: Second Lien Term Loan
  • Date: 2014
  • Location: Dallas, Texas
  • $40,000,000

Situation:

A family-owned, multi-generational, heavy equipment distributor was seeking to expand its reach by acquiring a large distributor in a neighboring territory, thereby creating a combined company with broad reach and best in class products. The family, having built significant balance sheet equity over the years through retained earnings, elected to raise junior debt capital instead of contributing $40,000,000 of additional equity.

Congruent proposed a second lien term loan structure that would sit behind the senior lender’s asset-based revolver in the capital structure. While the company is paying traditional mezzanine economics, the family avoided the dilution that would have come with an equity raise. Congruent is protected through its senior secured position and covenant protection in the credit agreement.

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Business Process Outsourcing

  • Type: Acquisition Financing
  • Structure: First Lien Term Loan
  • Date: 2014
  • Location: New Orleans, Louisiana
  • $77,500,000

Situation:

Owners of a best-in-class provider of outsourced claims adjustment services to the insurance industry entered into a definitive agreement to sell the company to a private equity firm. To finance the acquisition, the private equity firm was seeking a $77,500,000 credit facility, which was in addition to the more than $100,000,000 of equity that they were investing.

Congruent had a prior relationship with the company and its management team, providing for an easier, more seamless diligence process. Given the size, this was structured as a “club deal”, which is a consortium of like-minded lenders and is helpful when underwriting larger transactions. The first lien, senior secured position was supported by the company’s operational excellence in the industry, strong relationships with large insurance providers, and significant equity investment from a reputable sponsor.

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Media & Entertainment

  • Type: Growth Capital
  • Structure: First Lien Term Loan
  • Date: 2012 and 2014
  • Location: San Antonio, Texas
  • $14,800,000

Situation:

A family-owned operator and developer of live entertainment venues was raising growth capital to fund the company’s capital contribution for two new venues. These venues were being developed in partnerships with local municipalities which were providing a majority of the development capital.  Upon completion, the company would manage and operate these venues under long-term leases. Management are considered best-in-class operators with sterling reputations in this niche industry.

Congruent initially structured a $9,800,000 first lien term loan with warrants, providing a highly unique and customized structure that allowed for the delay in cash flows from the ramp of the new theatres.

Approximately two years after the initial raise, the company approached Congruent to upsize the existing facility by $5,000,000 to provide financing for a third venue, under similar terms as the initial funding.  Congruent saw this as an opportunity to expand its relationship with a great company and management team, expeditiously working to a quick close.

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