Hilco backs Hulcher rail-services takeover with US$60m first-lien ABL

Hilco Global Capital Solutions has provided a US$60m first-lien asset-based lending facility to finance Turnspire Capital Partners’ acquisition of North American rail-infrastructure specialist Hulcher Services.

The transaction places secured lending directly behind the private-equity takeover of a business operating 28 service centres across the US and Mexico and a specialised fleet of more than 3,000 pieces of equipment. Hulcher serves all six North American Class I railroads as well as passenger, short-line and industrial customers.

Hilco did not disclose the maturity, interest margin, advance rates or borrowing-base composition of the facility.

The first-lien designation gives Hilco senior-ranking security over assets pledged under the financing, but the announcement does not identify exactly which assets make up the collateral pool. It would therefore be premature to assume the entire equipment fleet is included in the borrowing base.

The structure nevertheless illustrates why asset-based finance can be well suited to acquisition funding for industrial businesses.

Hulcher combines recurring commercial relationships with a large physical asset base. A lender can potentially structure financing around eligible receivables, equipment or other assets while giving the acquirer access to liquidity without relying entirely on conventional cash-flow leverage.

Turnspire has said it intends to invest in Hulcher’s equipment fleet, expand infrastructure and maintenance services and strengthen its commercial operation following the acquisition. Railway Age reported that BMO Capital Markets advised Turnspire on the transaction, while Intrepid Investment Bankers advised Hulcher.

The US$60m ABL therefore serves two related purposes. It supports the change of ownership while giving the enlarged capital structure a secured financing component capable of supporting the business after closing.

That distinction matters because acquisition finance can create pressure on liquidity if all available capital is committed to the purchase price. An asset-based facility can preserve or create borrowing capacity linked to operating assets as the new owner begins investing in the business.

For Hilco, the deal adds a sizeable sponsor-backed industrial transaction to its lending portfolio. For Turnspire, it provides senior secured capital behind an acquisition whose underlying business depends heavily on equipment availability and the maintenance of North America’s rail network.