The Borrower was founded in 2018 and is a manufacturer and distributor of nitrile gloves used for medical, governmental, industrial, and service applications. The Borrower is the first and only manufacturer of nitrile gloves in the United States. The Borrower’s manufacturing plant is in Church Rock, New Mexico. The current plant is approximately 22,770 square feet and has one production line capable of producing 8,000 gloves per hour. The Borrower spent over $4MM in equity retrofitting the plant and purchasing/installing equipment. The Borrower leases the building from a related real estate holding entity, The Lessor, who has a lease with the Navajo Nation. The Lessor is owned by the two majority shareholders of The Borrower.

With the success of the first phase, The Borrower has partnered with the Navajo Nation to develop a second manufacturing plant adjacent to the existing facility. The Navajo Nation will provide The Borrower with the new 110,000 SF plant building, built-to-suit, and all utilities and necessary infrastructure for operation. The total cost of the building provided by the Navajos is approximately $19 million. The building is expected to take 12 months to construct. Navajo will lease the facility to The Lessor under a 75-year lease with no payments in the first five years.

The Lessor will sublease the facility to The Borrower. The manufacturing equipment and installation for the new plant will be funded through the USDA and SBA loans and additional equity. The Borrower plans to order equipment immediately upon closing because it will take approximately 12 months before the equipment is installed and commissioned for operation.

The new facility will have 6 manufacturing lines, 4-double and 2-single lines. The 4-double lines can each produce 28,000 gloves per hour while the 2-single lines can produce 14,000 gloves per hour. The design of the single and double lines enables the company to scale production to meet different sales volume requirements based on various glove sizes and types. The plants will run a 3-shift, 24/7 operation, which, when fully operational, will be capable of producing nearly 1.2 billion nitrile gloves annually. The Borrower will purchase the manufacturing equipment from a large Thailand based company that specializes in the design, engineering and fabrication of latex and nitrile glove production lines. Sama provided the equipment for The Borrower’s existing plant as well.

The Borrower’s current facility started producing gloves for sale in March 2020. To date, all of The Borrower’s output has sold. The Borrower initially planned to slowly ramp up production but due to the current coronavirus pandemic, The Borrower immediately started running a 3-shift, 24/7 operation. The Borrower has a backlog of orders to fill and is working to scale production ASAP.

Prior to The Borrower’s entry into the market, all nitrile gloves in the U.S. were imported from overseas manufacturers, primarily located in Southeast Asia. Malaysia is the current leading manufacturing country for nitrile gloves with four major manufacturers, which account for 50-60% of the global supply. The U.S. is the largest consumer of nitrile gloves with 35% of global consumption. Nitrile gloves have recently overtaken latex gloves in market demand due to the synthetic rubber making them stronger and free of allergens caused by natural rubber. Due to these superior qualities, many industries have switched to using only nitrile. Examples include the medical, food service, manufacturing, oil field, automotive, janitorial and tattooing industries. Government Agencies are also pushing towards using nitrile gloves instead of latex. This would generate substantial demand for The Borrower as they are the only source for domestically produced nitrile gloves and the federal government would be required to purchase The Borrower’s products due to the Buy American Act assuming price competitiveness and availability.

The Borrower has secured a long-term contract with a South Korean company to supply its synthetic rubber raw material needs. This company is one of the largest manufacturers of synthetic rubbers and resins in the industry and is considered a premier quality manufacturer of these raw materials. This company also supplies Hartalega, one of the leading nitrile glove manufacturers in Malaysia, which produces nearly 30 billion gloves annually. Securing this long-term contract will provide The Borrower with a steady supply chain and security against major price fluctuations.

Loan ID 0131
DSCR 2.55
LTV 62.37
Note Rate 3.25
Property Location NM
NAICS 326199
Guaranty Type USDA B&I
Loan Term 14 yrs
Rate type Var
Participation Availability Amount $ 5,250,000
Minimum Participation Amount $ 250,000
Original Loan Amount $ 15,000,000
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