Project Profiles

Mao Foods, Inc.

1839 E. 42nd Street
Los Angeles, California 90058

Census Tract:		2281.00
Street Minority %:		99.45%
Poverty %:		41.22%

Project Description
Mao Foods, Inc. requested a loan in the amount of $670,000. The purpose of the loan was to assist in the financial restructuring of debt to improve cash flow and facilitate a line of credit to provide additional capital for growth. The loan paid off the balance of an equipment and working capital loan on Mao Foods, Inc, which released a blanket security lien on the assets, and the remainder of the loan was used to pay down the payable outstanding with their major poultry supplier who had demanded payment when it went through a merger. After the merger, the poultry supplier introduced a stricter credit policy than its predecessor and required Mao Foods to reduce its outstanding account payables. The release of blanket security lien from the equipment lender allowed Mao Foods, Inc. to negotiate the line of credit for its working capital needs. The loan was made to Meridian partners, the real estate holding company owned by the shareholders of Mao Foods, Inc.

Neighborhood Description
The subject property is located in the south central portion of the city of Los Angeles, about 5 miles south of the civic center, and just west of the city of Vernon. The property's immediate area consists of older small single-family residences and industrial properties varying in size and age. Alameda Street, immediately to the east of the subject, is undergoing redevelopment as part of the Alameda Corridor Project. The current zoning of the property is "M2-2" Light Industrial.

Community Development Impact
This loan allowed Mao Foods, Inc., a minority business enterprise, to restructure their debt in order to improve their cash flow and provide additional capital for growth. After the merger of their major poultry supplier, Mao Foods, Inc. began searching for a line of credit to resolve the different credit policies between the merged poultry companies. Once the equipment and working capital lender holding the blanket security interest was paid off, the line of credit was put in place for Mao Foods, Inc. The structuring of this loan allowed Mao Foods, Inc. to stay in business with a healthy future. It allowed Mao Foods, Inc. to retain its 37 employees at its two plants.

Borrower/Sponsor
Mao Foods, Inc. is a family owned and managed "S" Corporation. The Mao family purchased East Olympic Poultry, Inc. in 1991. In March of 1999, the business changed its name to Mao Foods, Inc. The name change was a part of the idea to launch the new image that the Mao family wanted to introduce of the company. Mao Foods introduced a broader scope of goods offered to their current customer base and to prospective customers. The first core area of Mao Foods, Inc. is the production of fresh, premium quality, poultry in the USDA processing plant; the second core areas is the wholesale distribution of the processed poultry, other meats, produce, seafood, and dry goods to restaurants and markets in the Southern California and Las Vegas Areas. Their clients include Asian restaurants and regional Supermarket chains as well as certain nationally recognized restaurants in Los Angeles County, Orange County, San Diego County, and Las Vegas.

Community Development Finance Effect
The LDC loan that was made to Meridian Partners, the real estate holding entity, allowed Mao Foods, Inc. to restructure its debt to allow the company's future growth. The loan paid off loans that were on the books of Mao Foods, Inc. The new loan was booked in the books of Meridian Partners. This loan made the two entities stronger.

The LDC funds facilitated an additional $900,000 from private capital for this community development project in the form of a line of credit. The liens on the collateral used to secure the LDC loan:

United Commercial Bank
767 North Broadway
Los Angeles, CA 90012
Phone: (714) 532-0700