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Tech Capital Provides $10MM Secured Line of Credit to Taronis Fuels

October 23, 2020, 07:50 AM
Filed Under: Energy

Taronis Fuels, a global producer of renewable and socially responsible fuel products, announced the closing of a $10 million senior, secured line of credit with Tech Capital, LLC (“Tech Capital”). Tech Capital is a wholly-owned subsidiary of Technology Credit Union in San Jose, California. Tech Capital primarily lends to businesses in the software, IT services, and renewable and cleantech industry verticals. The credit facility has an initial term of 12 months and is priced at the WSJ Prime Rate, currently 3.25%, plus 2.75% for an annual interest rate of 6.0%.

Availability under the credit facility is governed by a formula that combines advances under existing accounts receivables, plus advances using existing inventory on hand. Based on the most recent internal Company financial information, the line should provide an immediate borrowing availability of $4.5 million to $5.0 million on an ongoing basis and is recalculated monthly. Availability on the line of credit is expected to gradually increase as the Company grows its working capital assets. The credit facility requires monthly interest payments only, and there are no amortization requirements.

“We are pleased to partner with Tech Capital to further enhance our working capital and overall liquidity position,” commented Scott Mahoney, CEO of Taronis Fuels. “The equity private placement completed last week significantly reduced our overall leverage with the elimination of $6.95 million in convertible, secured debt. The combined equity injection and debt reduction greatly improved the Company’s ability to swiftly complete this transaction, which had been in process for some time.”

“With the Tech Capital credit facility, we now have a scalable source of low-cost working capital to support our organic growth plans. Our lender is also highly supportive of our current mergers and acquisitions pipeline and is willing to augment our borrowing base capacity periodically to facilitate opportunistic investments as needed.”

“Our wholesale gas division is currently expanding into Sacramento, San Francisco, San Jose, and Houston. Our retail division is launching our Phoenix store in October and has plans to launch new locations in Houston, Dallas, and Fort Meyers during the fourth quarter. All of these locations are expected to accelerate revenue growth over the next several quarters, expanding our working capital assets. With Tech Capital as a partner, we now have a clear source of low-cost growth capital to support our business expansion plan objectives,” concluded Mr. Mahoney.

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