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Citibank Inks Accounts Receivable Facility with Polar Power

June 19, 2019, 08:50 AM
Filed Under: Energy
Related: Citibank N.A

Polar Power, Inc., a global provider of prime, backup and solar hybrid DC power solutions, entered into a Supplier Agreement, dated effective June 4, 2019, with Citibank, N.A., to further enhance its working capital structure.  On June 10, 2019, the Company received $5.2 million in connection with the sale of certain accounts receivable to Citibank pursuant to the terms of the agreement, which amout will be used to support the Company’s working capital needs.

Under the agreement, the Company may from time to time offer to sell to Citibank certain of the Company’s accounts receivable relating to invoiced sales made by the Company to its largest Tier-1 telecom customer and its affiliates. This credit facility provides the Company with the ability to receive 100%of the value of the accounts receivable invoiced, less the applicable discount charge of approximately 0.84% of the face value of the invoice. The Company receives payment from Citibank within 48 hours of Citibank’s acceptance of the invoice, which acceptance may occur within 10 days of submission of an invoice.

Citibank may change the pricing terms at any time in its sole discretion upon at least 30 days prior written notice to the Company. In addition, either party may terminate the agreement upon 30 business days prior written notice to the other party, provided that either party may terminate the agreement upon 5 business days prior written notice if the other party is in breach of, or fails to perform any of its material obligations under the agreement.

“We believe this credit facility is a complementary addition to our existing capital resources and provides us with low-cost means to increase our liquidity and flexibility in addressing our short term working capital needs,” said Mr. Luis Zavala, Polar Power’s CFO. “We expect this facility to be a long term component of our capital structure and is expected to stabilize volatility in our cash and cash equivalents, which we may experience from time to time. We want to continually improve our financial flexibility to support our continued growth in revenues to our Tier-1 telecom customers,” added Mr. Zavala.

“In executing our growth strategy, we planned for higher levels of inventory to ensure lower lead times for our customers. This agreement improves our liquidity while we work to improve lead times with our key offshore supply chain partners,” said Mr. Arthur D. Sams, Polar Power’s CEO. “We believe that with our current assets of $24.3 million compared to $3.7 million in current liabilities at March 31, 2019, coupled with our ability to convert certain of our accounts receivable to cash on a timely basis under the terms of the credit facility, provides us with greater ability to manage our growth during the next twelve months and beyond,” added Mr. Sams.

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