A rapidly growing heavy-duty excavation and construction-services business (the “Company”) was growing its fleet and sought to buy out and finance some legacy equipment rental arrangements to improve monthly cash flow. The Company specializes in excavation, haulage, construction material management, and production process delivery services for clients in various end industries.
To support the growth of its fleet, the Company entered into a rental agreement with a large equipment manufacturer (the “Vendor”) for heavy-duty construction and land moving equipment. Since then, the Company’s growth exceeded expectations. Its strong financial performance and optimistic outlook in target industries made the Company interested in buying out the Vendor equipment from the expensive rental agreements. The Company was looking for more than $5 million of total financing, which would be secured by the Vendor equipment. Atalaya was introduced to the opportunity through an originator that was limited to a much smaller hold size because the Company did not have audited financials.
In February 2019, Atalaya provided a loan against the Company’s Vendor equipment to enable the Company to buy out the expensive rental arrangements. Atalaya funded most of the transaction alongside the originator.
The Company’s strong growth trends were encouraging, and Atalaya had prior familiarity with the assets. As a result, Atalaya was able to get up to speed and move quickly, so that the Company could buy back the equipment at an attractive price. The Company was trending ahead of budget, and had success securing contracts with new and existing customers.
By buying out the Vendor rental arrangement via the funding from Atalaya, the Company will save on its rental payments, plus savings in overtime and maintenance charges. The financing from Atalaya enabled the Company to save cash, and use those savings to continue investing in growth.