Airborne, Inc. late last month closed a $200 million working capital revolver that offers the company a new funding strategy. Lanny Michael, cfo, explained that the facility, led by Wachovia Bank, is an accounts receivable-backed transaction. "The $200 million is specifically backed by a pool of receivables and we can borrow under it," he said. The facility has a three-year term. He said the company had never used this type of funding before but had been long considering it. "It's cost-competitive, and we can borrow under it like a commercial A1/P1 commercial paper program," he said. "It's an attractive way to borrow for short-term financing, because there's a floating rate." Airborne is an overnight and two-day air express carrier based in Seattle.
The receivables financing facility was provided by Blue Ridge Asset Funding , a subsidiary of Wachovia. Michael explained that Wachovia provides the back-up commitment and letter of credit to Blue Ridge, which in turn lends the money to Airborne, and has the security of receivables as collateral. "Our facility goes to the rating agencies, and we're rated based on the quality of the pool of receivables," he said.
The company also has a $275 million bank revolver signed last June. Michael said Wachovia leads that facility as well. The company did not go out to bid for the $200 million facility. "We have a long-term relationship with them and know they have a reasonable background with asset-backed financing," he said.