SLR provides Markstein Sales US$10m ABL facility against receivables and inventory

SLR Business Credit has closed a US$10m senior secured asset-based facility for California beverage distributor Markstein Sales Company, using both accounts receivable and inventory to support the company’s continuing working-capital requirements.

The financing gives Markstein a borrowing structure linked directly to two of the assets most closely associated with its operating cycle.

Receivables represent cash due from customers after products have been delivered, while inventory represents capital committed before those sales are completed. Combining both in an asset-based facility can give a distributor greater liquidity than relying on either asset class alone.

SLR said proceeds will support continuing working-capital requirements and provide flexibility for future growth.

Markstein is a multi-generational beverage distribution business serving Northern California.

For a distributor, cash can become tied up at several points in the cycle. Inventory has to be acquired and held before sale, while completed sales may subsequently remain on the balance sheet as receivables until customers pay.

An asset-based facility can recycle part of that capital by allowing the lender to advance against eligible assets, subject to borrowing-base rules.

SLR has not disclosed the respective advance rates applied to Markstein’s receivables and inventory, the maturity, pricing, borrowing-base reserves or debtor concentration limits. It also has not said how much was drawn at closing.

Those details are important because a US$10m commitment represents maximum facility capacity rather than necessarily US$10m of immediately funded borrowing.

The transaction is nevertheless a straightforward example of working-capital ABL at operating-company level.

Unlike a conventional cash-flow loan, where lending capacity is based primarily on earnings and leverage, availability under an asset-based structure is normally linked more directly to the quantity and quality of eligible collateral.

That can suit distribution businesses particularly well because receivables and saleable inventory are continuously being generated, collected and replenished.

For Markstein, the result is a revolving liquidity source aligned with the balance-sheet assets created through its core beverage-distribution activity.