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Fuel Distribution Company Refinancing & Growth Capital

Client Overview

A well-established fuel distribution company with strong asset backing and EBITDA approached Attract Capital to refinance its existing debt and secure additional working capital. Rapid expansion and investment in a new business line had strained its relationship with its bank lender, resulting in a cutoff of funding and reliance on high-cost loans. 

Challenge

  • Bank Relationship Breakdown: The company’s bank ceased lending due to increased working capital needs.
  • High-Cost Debt: Operations were being funded through expensive short-term loans.
  • Mezzanine Debt Risk: The owner explored mezzanine financing, which included a 12% interest rate and a 15% equity warrant—posing significant long-term cost and dilution.

Solution by Attract Capital

Phase 1

Strategic Financing Plan

  • Conducted a full financial analysis.
  • Designed a custom debt structure leveraging both asset value and cash flow.
  • Proposed consolidation of all high-cost loans into a single, integrated financing solution.
  • Focused on regional commercial & industrial (C&I) banks for lower-cost capital.

Phase 2

Lender Outreach & Execution

  • Contacted 40 regional banks.
  • Created a compelling lender presentation showcasing financial strength and collateral.
  • Managed lender negotiations and diligence.
  • Selected optimal lending partners and supported the closing process.

Phase 3

Acquisition Financing Advisory

  • Currently advising the company on M&A roll-up financing to support future acquisitions.

Results

  • Closed Financing: $15.8 million term loan and line of credit facility.
  • Working Capital: $1.5 million in new availability.
  • Debt Service Reduction: $175,000/month or $2.1 million/year—65% of free cash flow.
  • Interest Savings:
    • New loan interest: 6.75% ($965k/year)
    • Mezzanine loan interest: 12% + $1.5M warrant ($3.22M/year)
    • Total savings: $2.26 million/year (70% cost reduction)

Impact

  • Strengthened financial position.
  • Eliminated high-cost debt.
  • Avoided equity dilution.
  • Positioned for future growth and acquisitions.

Fuel Distribution Company

The Situation

A highly established fuel distribution company had:

  • Strong EBITDA
  • Significant asset base
  • Rapid historical growth

However, expansion into a new line of business increased working capital demands and strained the relationship with its existing bank.

The bank ultimately cut off lending support.

To fund operations, the company turned to:

  • High-cost short-term loans
  • Discussions with mezzanine lenders

The proposed mezzanine option included:

  • 12% interest
  • 15% warrant (equity ownership)

The owner approached Attract Capital to find a better path.

Designing a New Financing Strategy

Rather than pursue expensive mezzanine capital, we restructured the approach entirely.

Key Strategic Shifts

  • Targeted regional C&I bank lenders
  • Built a structure supported by asset value and cash flow strength
  • Consolidated multiple high-cost loans into one integrated facility
  • Designed long-term repayment and expanded working capital availability

This approach prioritized:

  • Lower cost of capital
  • Stability
  • Future flexibility

Full Market Outreach and Execution

  • Contacted 40 regional bank lenders
  • Rebuilt the financial presentation to highlight operating performance and collateral position
  • Managed negotiations
  • Selected optimal lenders
  • Led diligence and closing process

The Outcome

The company closed a:

$15.8 million term loan and line of credit facility

This facility:

  • Refinanced all existing loans
  • Provided $1.5 million in additional working capital availability

Quantified Financial Impact

Debt Service Reduction

  • Monthly savings: $175,000
  • Annual savings: $2.1 million
  • Equal to 65% of the company’s free cash flow

Interest Cost Comparison

New Bank Facility

  • 6.75% interest rate
  • $965,000 annual interest expense

Mezzanine Proposal

  • 12% interest
  • $1.72 million annual interest
  • 15% warrant valued at $1.5 million
  • Total effective cost: $3.22 million

Savings Achieved

  • $756,000 annual interest savings (43% reduction)
  • Avoided issuing a $1.5 million warrant
  • Total cost reduction of 70% versus mezzanine option

The refinancing materially strengthened cash flow and preserved ownership.

Ongoing Advisory

Following the refinancing, Attract Capital is now advising the company on:

  • New acquisition financing facilities
  • Planned M&A roll-up strategy
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