KLNG Koil Energy Solutions, Inc.

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Executive Summary

Koil Energy Solutions secured a new $5 million asset-based revolving credit facility with nFusion Capital Finance, LLC, structured as an 85% advance rate against eligible accounts with interest at Prime + 4.75% (6.75% floor). The facility replaces and repays a prior receivables factoring arrangement, leaving the company with no outstanding financial debt other than lease obligations, and provides flexible working capital to expand its high-margin rental equipment fleet.

Key Financial Metrics

Actionable Insight

Key Facts

• Revolving credit facility up to $5.0 million with nFusion Capital Finance, LLC, secured by substantially all personal property assets.
• Borrowing base set at 85% of eligible accounts; interest rate at Prime Rate plus 4.75% per annum, with a 6.75% floor on Prime.
• Initial maturity of 12 months, auto-renewing for successive one-year terms; lender may terminate on 90 days' notice.
• Facility replaces and repays in full a prior receivables factoring arrangement with a commercial bank; the company states it now has no outstanding financial debt other than lease obligations.
• Loan fee of 1.0% of the $5.0 million maximum revolver amount paid at closing; ongoing monthly collateral monitoring fee of 0.25% of average gross eligible accounts balance.
• Covenants include negative covenants limiting additional indebtedness, liens, investments, dividends, and share repurchases, with $500,000 annual limit on share repurchases.
• Events of default include failure to pay, breach of representations, cross-default, change of control, and material adverse change.
• Early termination fee of 2.0% of the maximum revolver amount applies if borrower terminates or lender terminates due to default within the first year.

Financial Impact

Up to $5.0 million revolving credit facility; initial loan fee of $50,000 (1.0% of $5M); ongoing monthly monitoring fee of 0.25% of average eligible accounts. Prior factoring arrangement repaid and terminated, resulting in no outstanding financial debt beyond lease obligations.

Risk Factors

• Secured by first-priority lien on substantially all assets — default could trigger accelerated repayment and loss of collateral.
• Interest rate is floating (Prime + 4.75%), exposing the company to rising rate environments.
• Availability depends on eligible accounts receivable, which may fluctuate with business cycles.
• Facility has a 12-month initial term with automatic renewal; lender can terminate on 90 days' notice, creating renewal risk.
• Tight negative covenants restrict additional indebtedness, dividends, and share repurchases without lender consent.

Market Snapshot

Documents Analyzed

This report is based on 7 SEC documents filed with EDGAR.

US Market Status