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Cadence Bank Helps Cougar Holdings Meet Working Capital Goals

Cougar Holdings President Mike Zacharias

Cadence Bank Helps Cougar Holdings Meet Working Capital Goals

It’s not unusual for growing companies to experience working capital shortfalls. Cougar Holdings, a Cadence Bank client, is one such growing business.


Cougar Holdings is a specialized manufacturer’s representative and stocking distributor of mechanical and plumbing products located in Houston. The company has experienced steady growth since it was founded in 2003 as a sales organization with just three employees. Sales last year topped $12 million, and the company now employs 21 people.


Growth really started to take off in 2010 when Cougar Sales (as it was known at the time) added a new division, Cougar Systems. Cougar Systems now houses Cougar Controls, a UL501A Industrial Control Panel shop that manufactures custom control panels, and Cougar Fuel Systems, which fabricates fuel oil handling systems for mission critical applications as well as custom pump skids.


These fabrication projects, however, require large outlays of capital upfront, often long before an invoice is even generated. This has resulted in significant financial challenges for the company.


“We have to purchase all of the equipment and materials for a project upfront,” explains Cougar Holdings President Mike Zacharias. Typical projects handled by Cougar Holdings include wastewater treatment plants and systems for healthcare, data and communications centers where backup and full redundancy are critical. “This can represent a six-figure investment for which we might not receive revenue for 90 to 120 days or longer.”


Financing to Meet Working Capital Challenges


To help meet these working capital and cash flow challenges, Cougar Holdings relies on a $500,000 term loan from Cadence Bank. Zacharias says they use this as kind of an in-house line of credit to cover large equipment and material purchases that must be made in order to meet the custom fabrication demands of their customers.


In addition to utilizing this term loan, Cougar Holdings also uses financing services from another lender that Cadence Bank works with regularly. “We use this financing to accelerate receipt of our accounts receivable,” says Zacharias.


Zacharias explains that Cougar uses the Cadence Bank term loan primarily to purchase equipment and materials needed for large fabrication projects where revenue won’t be realized until months later. “Sometimes we are buying materials from up to six or eight different vendors, so the dollars outstanding can get to be pretty big. Meanwhile, our other financing arrangement helps meet our day-to-day cash flow needs.”


Eventually, Cougar Holdings would like to move from the financing provided by the other lender to a Cadence Bank line of credit. “They have experienced very rapid growth spurts,” explains Cadence Bank Senior Vice President Linda Aguilar. “We’re working with them now to get the proper structure set up so they can transition to a working capital line of credit in the near future.”


Growth Goals for the Future


With the restructuring early this year that formed Cougar Holdings, one of Zacharias’ short-term goals for the company is to develop a national network of exclusive distributors to sell products for Cougar Controls and Cougar Fuel Systems. “This will lead to even more growth and the need for additional financing support from Cadence Bank,” he says.


Zacharias is appreciative of the work that Cadence Bank — and Linda Aguilar in particular — has done to help Cougar Holdings meet its financing challenges. “Cadence worked with us to coordinate everything involved in our term loan and other financing arrangement — and then we turned around and complicated things by restructuring,” he says. “Linda had to rework everything to accommodate this and she came through with flying colors. It was very demanding.”



Watch our video where Cougar Holdings’ Mike Zacharias talks about maximizing growth potential.


Cadence Bank specializes in helping small and middle-market companies meet a wide range financing challenges. Contact Cadence Bank to discuss your company’s specific challenges and how we can help.


This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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