May Fund Commentary

Fund Commentary – May

The Coral Cove Private Credit Fund (the “Fund” ) returned 0.91% (Class I Units) in May. Annualized returns since inception (January 2021) are 9.70%.

Fund Insights

The Fund’s underlying portfolio (the “Portfolio”) has exposure to approximately 49 factoring, asset-based, equipment finance, lender finance, specialty finance, or similar type loans. Presently, the geographic weighting of the Portfolio is approximately 63.5% to the US and 36.5% to Canada. Of these positions, the largest portfolio weights are 41% to factoring, 32% to lender finance, and 12% to asset-based loans.

Fund Commentary

• During May, the Fund completed two new transactions. One of them was with a client in Texas who operates in the energy sector, while the other was with a company in North Dakota that specializes in transportation. These transactions involved factoring facilities that helped improve their working capital.
  May saw a strong lending market with several noteworthy opportunities, which are highlighted below:
• We have sent a proposal letter worth US$21 million to aid the growth of a US oil and gas service company. The letter includes an AR revolver and equipment term loan, which will refinance the current lending institution and offer the company an improved level of liquidity. This will enable them to pursue various growth possibilities that lie ahead. The company is owned by a sponsor who has been supporting equity injections to share the risks.
• We have offered a proposal letter worth US$7 million to assist a food manufacturer/distributor that is growing and well-capitalized. Our revolver, which is mainly secured against accounts receivable with a small inventory component, will offer liquidity to help the company’s expansion and avoid the necessity of raising more equity funds. The company has historically been funded by equity and currently has an unleveraged balance sheet.
• We proposed a factoring facility to a Canadian restaurant that also specializes in distributing specialty frozen pizzas. The facility would assist in their growth throughout Canada and to the US.
• We provided funding for a $2.5 million Equipment Term Loan that was secured by 19 dump trucks for a company situated in Southern California.

At Garrington, we are confident in our ability to support our clients in achieving their goals and providing cost-effective solutions to their business needs. We take pride in our success in helping our clients grow their businesses and building enduring relationships with them.