First Capital closed its $283 million securitization of senior secured working capital loans to small and mid-sized private companies.

The capital structure includes a senior tranche rated ‘AA’ by DBRS and two subordinate tranches rated ‘BBB’ and ‘BB’. Guggenheim Securities served as lead initial purchaser in the rule 144A private placement, and KeyBanc Capital Markets served as co-manager.

The deal is the specialized commercial finance company’s largest secured funding facility to date and its third term securitization, according to a company press release. The company provides working capital lines of credit typically ranging from $2 million to $25 million in the form of asset based loans or factoring arrangements to middle-market businesses with annual sales ranging from $10 million to $250 million.

Although similar to a CLO, the securitization deal is backed by senior secured working capital loans to small and mid-sized private companies. Most CLO's are filled with loan participations or high yield bonds to large companies, and are rated based on the underlying ratings of the debtors, explained Glen Stein, Chief Financial Officer of First Capital.

“Our deal is secured by loans; but our loans are different,” said Stein. “First Capital is the only working capital lender to these small and mid-sized companies. We make the loan, service the loan and monitor the borrower.”

The deal lowers the cost of funds for the company and extends its debt maturities.

 “We are seeing healthy demand for loans from middle market businesses,” said Lee Wilson, CEO and chairman of First Capital. “The new securitization increases our capacity to make working capital loans to entrepreneurial companies and enhances our competitive position.”

 

 

 

 

 

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