A subsidiary of Technology Credit Union of San Jose, Calif., Announced Wednesday that it has signed a $ 10 million line of credit to an Arizona company that is making the use of a welding gas safer and cleaner than traditional gases.
The asset-based revolving credit facility is one of the largest provided by Tech Capital LLC, a CUSO founded in 2015 and a wholly-owned subsidiary of Tech CU ($ 3.5 billion in assets, 131,977 members).
The recipient is Taronis Fuels, Inc., a publicly traded company based in Peoria, Arizona that has a patented process for making an alternative cutting gas called MagneGas, which competes with acetylene and other industrial gases. As of Aug. 1, the company had $ 16.9 million in debt and $ 38.2 million in equity.
Tech Capital asset-backed loans leverage accounts receivable, inventory, and equipment. Joe Anzalone, managing director, said the loan shows how Tech Capital is delivering flexible loan solutions to help borrowers seize growth opportunities.
“I’m delighted that we were able to do just that for Taronis Fuels,” said Anzalone. “This loan agreement with Taronis Fuels is an excellent example of how we are working to develop a structure that uniquely meets the needs of our customers.”
Taronis plans to provide gases for the propane market from this year and for the compressed natural gas market from 2025. An investor presentation in the third quarter said its fuels are hydrogen based, have a low carbon footprint, and are made from common industrial waste.
The company’s MagneGas Welding Supply now operates in California, Arizona, Texas, Louisiana, Indiana, Georgia, and Florida. It is planned to expand into 14 more countries.
“This loan enables us to accelerate growth by providing working capital to support our acquisition and expansion strategies,” said Scott Mahoney, CEO of Taronis Fuels. “As an innovation leader in clean fuel alternatives, it made sense to work with an innovation leader in the financial sector. Tech Capital understands our mindset and needs and has tailored a line of credit that grows with us. “
The company said its production costs have decreased and its welding gas is now 25 to 35% cheaper to manufacture than acetylene. In addition to the environmental benefits, it can now take advantage of the price to compete in the $ 3 billion metal cutting fuel market.
Its MagneGas burns at 10,400 degrees Fahrenheit, compared to 5,612 degrees for acetylene. The advantages for metal workers also include faster cutting times and the ability to cut thicker sheets with little slag and soot.
Tech CU is now nearing $ 2 billion in sustainable energy funding in residential solar systems.
In the corporate lending space, Tech CU extended $ 27.3 million in commercial and industrial loans from January through September, up from $ 9.3 million last year.
Tech CU posted net income of $ 23.9 million for the nine months ended September 30, representing an annualized return on average assets of 0.97%, compared with an ROA of 1.17% for the first nine Months of 2019. The net asset ratio was 9.91% as of September 30th.