Case Study

More Valuable Assets, Better Borrowing Capacity

Background

Headquartered in Arkansas, Allens has been growing, processing and distributing frozen and canned vegetables since 1926. With 13 processing facilities and several distribution centers in seven states, and 17 different private labels, Allens does business with retailers, foodservice operators and industrial clients throughout the United States. In order to fund its expansive operations and continued growth strategy, Allens needed to reevaluate its ability to take advantage of certain asset-based lending opportunities.

Our Involvement

The Freeborn Food Industry Team identified two major areas where Allens could modify its current operations in order to significantly increase its borrowing capacity, minimize any perceived lending risks and secure its accounts receivable. By modifying Allens' fresh produce supply contracts Freeborn allowed the company to expand the scope of its collateral beyond its post-harvest inventory to include the value of its pre-harvested crops. In so doing, Allens significantly increased its asset-based borrowing capacity, which helped fund the continued operation and growth of the company. By customizing facility audit templates, Freeborn & Peters helped Allens to properly secure its accounts receivable under the trust provisions of the Perishable Agricultural Commodities Act (PACA). This audit helped Allens increase the value of its current asset base, which further increased the company’s borrowing capacity.

Results

Food processing companies, such as Allens, are uniquely positioned to take advantage of certain agricultural laws that, if used properly, create significant value and competitive advantages. Allens' savvy utilization of various agricultural statutes allowed it to accomplish two major objectives: (1) create an entirely new category of collateral that is available for asset-based lending purposes and (2) increase the value of significant portions of its current collateral base. Both of which increased the company’s borrowing capacity and helped fund its operations and continued growth.