$8,500,000 Golf Course Refinance Three Weeks!!!
Frankel Financial Corp’s most recent success involves an array of FFC services: help a large institution maintain a hefty deposit relationship with a valued customer, provide a client with an excellent financing solution in a very short time period, and present three banks with a quality asset to share.
One of the larger banks in the area maintains a multi-million dollar deposit relationship with a Japanese company. This company is the majority stockholder in a semi-private golf course in the United States, which it pledged as collateral for a note payable to a major Japanese bank. The Japanese economy is suffering, and its banking industry is experiencing dramatic liquidity problems and trends of mergers and acquisitions not dissimilar from our own. As a result of a recent merger, the Japanese bank gave our client the opportunity to buyout the note at a significant discount.
The client approached their bank in the United States figuring they could easily borrow the money, especially since they were planning on selling the golf club within the year. To their surprise, the large commercial bank was not interested in making an $8.5 million bridge loan. The bank was especially disinterested due to the short- term nature of the request and the fact that the funds were headed straight out of the country. The logic was good, but the transactional nature of the deal turned off the large commercial bank. With less than 35 days left to take advantage of the discount on the note, their bank referred them to FFC.
Frankel Financial Corp. quickly identified the transaction as one we could structure and finance. With little time to operate, we offered a two-tiered solution. First, we secured our backup position, a private source of funding who committed to the financing in five days. The private money was expensive at 12% but provided the customer with an opportunity to take advantage of the large discount making it extremely cost effective regardless of the higher rate. Second, we endeavored to secure a more competitive deal. We had to be cautious because the referring bank did not want to see this deal end up in the hands of a competing institution who would likely pursue and/or require the significant deposit relationship. With the express permission of the referring institution, we pursued the second tier of our financing solution. The second tier involved presenting the deal to smaller institutions as a transactional loan. The deposit relationship was clearly taken off the table and the loan was presented strictly as a solid cash flow and collateral based transaction with strong management character. We quickly secured a lead institution interested in booking the loan. Then, due to the legal lending limit of the lead bank, we secured two additional institutions as participants on behalf of the lead institution.
Ultimately, we were able to syndicate the transaction to three participating banks. The three banks agreed not to pursue the deposit relationship and committed to participate together to provide the financing. With significant help from the lead bank, we were able to leverage relationships with appraisers, environmental engineers, and a title company to complete all the reports necessary in record time. Issuance of the initial commitment letter to closing took less than three weeks.
Taking into account a thirteen- hour time difference, the two days necessary for the funds to reach Japan, and a weekend at the end of the month, the loan closed and funded within minutes of the borrower’s strict time deadline.