L.O.T.W. #132 - Starco Brands secures new asset based facility from Gibraltar Business Capital
$12.5 million revolver tied to eligible A/R, inventory, and credit card receipts also includes a $1.5 million permitted overadvance sub-facility
In May 2024, consumer goods marketing company Starco Brands secured a new ABL facility to support the repayment of an existing subsidiary bank line and retire a portion of outstanding related party subordinated debt. Notable terms include: $1.5 overadvance sublimit, 90% advance rate on eligible account & credit card receipts, and a single LTM EBITDA covenant.
👓At a Glance
Borrower: Starco Brands (OTC: STCB)
Lender: Gibraltar Business Capital
Deal Size: $12.5 million
Structure: Formula-driven asset based revolver
Rate: Variable options include
1 month SOFR + margin based on excess availability
Prime + margin based on excess availability
Term: 24 months
Use of Proceeds: Refinance existing bank loan; repay portion of related party subordinated debt
Source: Press Release
📷Borrower Snapshot
Sector: Consumer Discretionary
Subsector: Broadline Retail
Ownership: Public
Commercial Stage: Revenue generating; LTM EBITDA negative
Business Overview: Starco Brands is a consumer products company that develops and acquires brands with differentiated technologies and strong cultural resonance. Its portfolio spans categories including food and beverage, household, personal care, and beauty, with products such as Whipshots (vodka-infused whipped cream in partnership with Cardi B) and Art of Sport (athlete-focused personal care). Leveraging vertical integration through The Starco Group and a focus on innovation-driven marketing, Starco aims to disrupt mature categories with products designed to change consumer behavior and create new demand curves. The company’s strategy emphasizes scalable distribution, licensing partnerships, and rapid commercialization of emerging trends.
⚙️Structure & Terms
Source: SEC Filing
Commitment:
$12.5 million
$1.5 million amortizing overadvance sublimit
amortizes $125k over 12 months beginning June 1, 2024
Borrowing Formula:
90% of eligible A/R
90% of eligible credit card receipts
the least of $7.0 million and the lesser of a) 65% lower of cost or market value of inventory, and b) 85% of OLV
Maturity: June 24, 2026
Collateral: 1st priority security interest in all assets; full dominion of funds (lockbox)
Rate: Variable with both SOFR or Prime options + applicable margin tied to excess availability
SOFR applicable margin ranges from 4.50% to 5.0%
Prime applicable margin ranges from 3.5% to 4.0%
Fees:
Closing Fee - 1%
Unused Line Fee - 0.375% per annum
Exit Fee - months 0-12 - 2%; months 13-24 - 1%
Financial Covenant:
Min. LTM EBITDA