Calling the past year one of "sustainable growth", Gloucester Engineering Co. (GEC) CEO Mark Steele announced a new $1 million loan commitment from the Massachusetts Growth Capital Corp. (MGCC) for the extrusion technology supplier. The loan was presented by MGCC President Charles Grigsby at a ceremony marking GEC's 50th anniversary.
|Gloucester Engineering accepts a $1 million loan from the MGCC (left to right) Michael Hunter, undersecretary, Massachusetts Executive Office of Housing & Development; Mark Steele, CEO Gloucester; Charles Grigsby, interim president, MGCC; Rick Lewis, MGCC credit officer; Bob Germino, senior loan officer, MGCC; and Neil Martin, COO MGCC.|
Local government dignitaries participated in the event, including Massachusetts Senate Minority Leader Bruce Tarr, Representative Ann Margaret Ferrante, and Gloucester Mayor Carolyn Kirk, along with members of the Gloucester City Council.
GEC emerged from bankruptcy in 2010 after an investment by New York private equity firm Blue Wolf Capital Partners, which is a majority stakeholder in the company.
Grigsby told PlasticsToday that the June 7 announcement follows on an earlier credit guarantee supplied by MGCC to GEC in October 2011. At that time, MGCC provided a two-year guarantee of $1 million to support letters of credit for GEC to purchase materials for its orders. "As GEC is not yet profitable and is a year out of Chapter XI," Grigsby said, "trade vendors require some support for purchases."
The interest rate on the loan is 3%, and Grigsby said that if any amount is advanced, it could be converted to a term note at 10%. "Our expectation is that after GEC demonstrates a year of profitability," Grigsby said, "traditional bank financing will supplant the MGCC loan, and we will be replaced." Grigsby said GEC was introduced to MGCC by the office of Massachusetts Secretary of Housing and Economic Development after Blue Wolf Capital had approached that agency.
The MGCC was created in 2010 as part of an economic development bill designed to help small businesses create jobs by providing greater access to capital. It was formed from the consolidation of the Massachusetts Community Development Finance Corporation (CDFC) and the Economic Stabilization Trust (EST), and injected with $35 million of new capital.