North Atlantic Overview
North Atlantic Capital, based in Portland, Maine, is currently investing out of its fifth
fund. North Atlantic targets rapidly growing business-to-business technology companies
with revenue rates above $10 million, including strong recurring revenue. North Atlantic
generally makes initial investments of between $5 and $10 million structured as
subordinated debt with warrants.
North Atlantic Capital’s subordinated debt offering can be an appropriate
financing option to more expensive equity capital or less patient mezzanine or
venture debt.
Subordinated Debt Features
The characteristics described below are typical of North Atlantic’s subordinated debt
investment structure, although terms may vary somewhat depending upon the capital
structure of the company being financed.
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Five or six year term with no principal payments due until maturity
No financial covenants
Deeply subordinated, junior collateral position
For companies considering subordinated debt funding, these features provide more
permanence in their capital structure and enhanced access to senior debt. North
Atlantic’s subordinated debt is more expensive that traditional mezzanine or venture debt.
North Atlantic’s objective is to at least double its invested capital over the life of the
investment. The primary pricing elements are as follows:
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Current pay interest rates in the range of 10% to 12% p.a.
Prepayment charge of 5% in year one, declining by 1% each year
Nominally priced warrants in the most recent equity financing
Typical Applications
North Atlantic’s subordinated debt has been utilized in the following situations:
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Bridge capital toward an exit within next one to two years
Investors and management want to avoid ownership dilution from outside equity
Refinance existing mezzanine or venture debt that has begun to amortize
Finance acquisitions
For more information contact either
David Coit or Mark Morrissette at 207-772-4470
or visit www.northatlanticcapital.com.