Investors

Atlantic Metro Communications

Background

Atlantic Metro Communications (“AMC”), based in Parsippany, NJ, provides data center, colocation, internet connectivity and managed services in key metropolitan areas. AMC provides physical space, power, network connectivity, monitoring, and management and support services to enable its customers to outsource information technology needs locally, securely and cost effectively. 

AMC sought $3.0 million in financing to complete an acquisition of a competitor that would expand AMC’s geographic reach, customer list and service offering. In addition, AMC required $2.0 million to refinance existing debt and for working capital.

HDC's Solution & Results

HDC sourced the investment from a relationship with the advisor to the company, whom HDC built a relationship with over 12+ years. HDC structured a $5.0 million senior-secured term loan with a $4.5 million initial draw and $0.5 million delayed draw (which was ultimately not drawn). The loan was secured by 100% of AMC’s assets. 

HDC’s loan enabled AMC to complete a strategic acquisition, and delay equity dilution until the company reached a higher valuation, which nearly doubled during HDC’s investment. The loan was repaid in full within approximately thirteen months and generated a gross, unlevered IRR of 16.3% (MoIC of 1.2x)

Danimer Scientific

Background

Danimer Scientific, headquartered in Bainbridge, GA, produces a bioplastic replacement for traditional petroleum-based plastics targeted primarily to global consumer products and packaging companies. For example, the company recently partnered with Bacardi to develop a 100% biodegradable and compostable bioplastic bottle. While conventional plastic bottles take over 400 years to decompose, the new spirits bottles are expected to biodegrade and completely disappear after 18 months. The biodegradable bottle is expected to replace 80 million plastic bottles – equating to 3,000 tons of plastic – produced by Bacardi across its portfolio of brands every year. 

Danimer sought $6.0 million in financing to acquire additional manufacturing equipment and for working capital.

HDC's Solution & Results

HDC sourced the investment from an advisor in our referral network. HDC structured a $6.0 million senior-secured term loan with a $4.7 million initial draw and $1.3 million delayed draw (which was ultimately not drawn). The loan was secured by 100% of Danimer’s assets.

HDC’s loan enabled Danimer to complete its pilot manufacturing line. The loan was repaid in full in 23 months and generated a gross, unlevered IRR, excluding the warrant, of 15.6% (MoIC of 1.3x). Subsequently, Danimer merged with a public company in December 2020. As a result, the gross, unlevered IRR, including the warrant increased to 60.7% (MoIC of 4.1x).

Tuff Shed

Background

Headquartered in Denver, CO, Tuff Shed is one of the largest domestic manufacturers of wooden storage buildings, garages and larger building shells. The company sells its products directly to consumers and through The Home Depot.

While Tuff Shed had dramatically reduced its operating expenses to regain profitability after a large, unexpected drop in revenue, the company’s longstanding lender, which had decided to reorient its focus on larger companies, was unwilling to renew its revolving line of credit despite the improvement. Private equity proposals to repay the debt were highly dilutive with a loss of control for the founder.

Tuff Shed sought $11.0 million in financing to repay its existing debt and for working capital.

HDC's Solution & Results

HDC sourced the investment from an advisor in our referral network. HDC structured and led a $11.0 million senior-secured term loan. The loan was secured by 100% of Tuff Shed’s assets. At closing, the estimated loan-to-value was approximately 40%.

The loan was repaid in full in 31 months and generated a gross, unlevered IRR of 24.1% (MoIC of 1.5x). The founder and CEO retained 100% ownership of the business.