[Kevin Henry-Seacoast]

Hey DF,

A couple things I have noticed I thought I would share.

1-There is a mega-merger between two South East based banks that is causing some of their customers to seek new lending relationships. Some of the problem customers are being asked to find another lender. Most have facilities ranging from $3Mil to $10Mil. Some are not problems at all, but are smaller loans sitting in the commercial lending department that are being asked to leave. This occurs alot when banks merge and is an opportunity to pick up some lower middle market customer seeking traditional LOCs, ABL or factoring facilities. I have seen several of these deals this week from a variety of referral sources.

2-Tariffs. The tariffs on imports/exports is having an effect on lower middle market metals related businesses. Businesses that wholesale metals, fasteners, nails, etc... Their customers are large and have terms from N30-N60 and not willing to pay any increases due to tariffs. The suppliers to the wholesalers are passing along the cost and squashing terms to distributors and wholesalers. Credit limits are either being cut or eliminated all together. The wholesaler is being forced to front more money for products at a higher cost. This is not only putting pressure on margins, but also putting a major strain on working capital. The ones that I have spoken to over the last several weeks either have small LOCs with their bank or using advances. There is a need for cost effective, revolving working capital facilities to ease the pain.

We like companies that are wholesale distributors of metals and fasteners that are sold into the building supply market, industrial manufacturing market, or defense market.

Our ideal customer:

-Based anywhere in the US selling products to large commercial customers.
-Revenues from $2Mil to well over $300Mil.
-Facility need from $500K to well over $30Mil.

Best,

Kevin

[Kevin Henry-Seacoast]

Bump...... Did everyone see the lackluster GDP numbers this morning???? The largest drag......manufacturing is slowing.......