Transforming an Exhausted Credit Facility Into a Sustainable Lending Platform

Client

A wholesale grocery distributor generating approximately $37 million in EBITDA and supporting an ecosystem of approximately 300 independent supermarkets across the Northeast United States.

The Challenge

The company had fully utilized approximately $37 million of financing capacity dedicated to its customer lending program. That program financed supply and trade agreements, working capital, capital expenditures, acquisitions, store expansions, and new locations for independent supermarket operators.

The challenge extended beyond an exhausted facility. The customer-financing program was integrated into the company’s primary credit facility. As customer loans aged or entered default, additional reserves were required while the company continued to satisfy the covenants and financial requirements of its primary lending relationship. Slower repayments increased reserve requirements, constrained availability, pressured the balance sheet, and reduced the ability to recycle capital into new supermarket opportunities.

What Others Saw

At first glance, the challenge appeared to be a liquidity problem: an exhausted credit facility with aging loans that needed to be refinanced or removed from the balance sheet. Replacing one facility with another, however, would only have recreated the same problem.

The underlying portfolio had structural weaknesses involving underwriting, repayment analysis, documentation, risk management, portfolio monitoring, and the way capital moved through the customer-financing program.

What XEPER Saw

XEPER approached the engagement as a complete restructuring of the company’s lending platform rather than a single financing transaction. Extensive due diligence and ongoing portfolio analysis revealed interconnected issues in supply and trade agreements, repayment obligations, reserve requirements, portfolio aging, and the operating information used to assess each store.

Rather than allowing loans to remain on the balance sheet indefinitely, XEPER designed a structure in which customer financing could initially be provided on a shorter-term basis and subsequently refinanced or transitioned to long-term capital partners.

The Outcome

The proposed restructuring created a pathway to address both the existing $37 million portfolio and the long-term sustainability of the company’s customer-financing platform.

• Reduce aging and stagnant credits.
• Lower balance-sheet pressure created by increasing loan-loss reserves.
• Improve underwriting consistency and portfolio risk management.
• Strengthen customer-level financial reporting and operating discipline.
• Create greater portfolio velocity by moving seasoned loans to outside capital partners.
• Restore lending capacity for acquisitions, expansions, working capital, and new-store development.
• Transform customer financing from a balance-sheet constraint into a more disciplined and scalable business platform.

The Takeaway

A depleted credit facility is not always a capital problem. Sometimes the real issue is the infrastructure surrounding the capital—how loans are underwritten, documented, monitored, collected, refinanced, and ultimately moved through the balance sheet.

XEPER did not approach this engagement by simply seeking another lender. We redesigned the system. By combining credit restructuring, risk management, operational analysis, and capital-markets strategy, XEPER created a framework designed to allow capital to move rather than remain trapped in an aging portfolio.

This story is presented for informational purposes. Client identity is withheld by agreement. Results are specific to the circumstances described and do not guarantee future outcomes. All transactions remain subject to due diligence, underwriting, credit approval, legal review, and definitive documentation.