Second Avenue provides IT’SUGAR US$8m senior secured working-capital revolver

Second Avenue Capital Partners has provided specialty confectionery retailer IT’SUGAR with an US$8m senior secured revolving credit facility, adding working-capital liquidity as the business expands beyond its store and e-commerce network into wholesale distribution.

The facility was announced on 6 October and will support day-to-day working-capital requirements as well as additional growth investment.

IT’SUGAR operates more than 100 locations across the United States and Canada and has recently launched a wholesale business designed to expand distribution of its branded and differentiated merchandise.

That expansion increases the relevance of revolving working-capital finance.

A retailer operating physical stores, e-commerce channels and wholesale distribution must fund inventory before products are sold and cash is collected. Adding a wholesale channel can further lengthen the cash-conversion process because stock may move into business-to-business receivables rather than being converted immediately into cash at the point of retail sale.

Second Avenue said the financing gives IT’SUGAR greater flexibility to invest in productive inventory and execute strategic initiatives.

The lender is affiliated with Schottenstein and specialises in asset-based loans and structured financing solutions.

Neither party has disclosed the facility’s maturity, pricing, borrowing-base calculation or advance rates. The announcement also does not specify the precise collateral package beyond describing the revolver as senior secured.

Those terms would determine how much of the US$8m commitment is actually available at any point.

For IT’SUGAR, however, the structure provides revolving rather than fixed-term liquidity, allowing drawings to vary as seasonal purchasing and inventory requirements change.

That flexibility can be particularly important in confectionery retail, where stock levels and purchasing requirements can move sharply around holidays and promotional periods.

The facility is small compared with several recent ABL transactions, but the combination of a recognisable consumer name, more than 100 stores and a new wholesale model gives the deal a clearer operational working-capital angle than a routine small-company revolver.

The financing therefore supports not just expansion in store sales, but a shift in IT’SUGAR’s distribution model that may increase the amount of capital tied up between inventory purchase and final customer collection.