Rhino Health Inc. has closed a $58 million financial transaction that will help the only manufacturer of nitrile gloves in the United States complete expansion of its operations in south Fort Worth, the company announced Thursday.
The funding comes from New Markets Tax Credit (NMTC), with capital from five Community Development Entity lenders that aim to boost economic development in underserved areas.
The $58 million will go toward the cost of equipment and working capital for Rhino Health’s $200 million expansion of its manufacturing plant at Majestic Fort Worth South Business Park. Rhino Health has also relocated its headquarters to the site.
“We are pleased to close on this important tax credit transaction that will allow us to fully build-out our Fort Worth expansion,” said Mark Lee, CEO of Rhino Health. “The additional capital made possible from NMTC transaction has been particularly impactful as this large-scale project is being implemented in an especially challenging economic environment, where construction and implementation costs are at an all-time high.”
Rhino Health’s project and the NMTC financing is important to the city’s goals and economic well-being, according to Robert Sturns, director of the city’s economic development department. NMTC financing awards federal tax credits to private lenders who invest in low-income community projects.
“Having this type of investment, especially a corporate headquarters, in this part of Fort Worth is critical to our community’s long term health,” said Sturns, noting that the city’s 2017 economic development strategic plan and its 2021 update target equity-focused initiatives to help strengthen all communities in the city.
“To that end, we developed a framework called Full-Strength Fort Worth which was based on the recognition that Fort Worth cannot compete at full-strength while leaving portions of the community on the sidelines,” Sturns said. “So while attracting a corporate headquarters to any part of the city is a positive win, it is very significant that Rhino Health chose to locate in one of our underserved areas.”
The NMTC has not been widely used in Fort Worth but Sturns said it could be important to revitalization efforts in southeast and east Fort Worth.
Rhino Health will create new 520 jobs at the 400,000-square-foot lease facility in the business park, where it expects to produce 3 billion nitrile gloves per year. The nitrile glove market was predicted to be $11.4 billion in the U.S. in 2021 and the global market is expected to hit $57.1 billion by 2026.
Demand for these gloves in the health care industry exploded during the pandemic for use as personal protective equipment. Other industries that use the gloves include food and beverage, chemical and petrochemical and automotive because they lower the risk of contamination.
Lee’s career manufacturing, importing and distributing global brands from Asia to the U.S. led him to found Rhino Health in 2017 and begin producing nitrile gloves a year later at a plant in Church Rock, New Mexico, in partnership with the Navajo Nation. The New Mexico facility continues to operate.
His family immigrated to the U.S. when Lee was a child and he grew up to embrace the spirit of entrepreneurialism. During his travels across the country as an importer, he saw many abandoned factories and became passionate about restoring manufacturing in this country, he said.
Earlier this month, Honeywell (NASDAQ: HON) announced its investment and ownership interest in Rhino Health for an undisclosed amount.
“Honeywell’s investment in and partnership with Rhino Health USA will strengthen the U.S. supply chain for critical PPE that is keeping health care workers safe,” Morgan Kurk, president of Honeywell’s PPE business, said in a statement. “We look forward to working with Rhino Health USA, a leading provider of health care and medical solutions, to help prevent future PPE shortages.”
In 2021, the U.S. Department of Defense, along with the Department of Health and Human Services awarded Rhino Health a $56 million contract to increase domestic production of nitrile gloves, which fell into short supply for health care workers during the pandemic.
Rhino Health expects to be producing gloves at about 50 percent capacity at the Fort Worth facility by the end of the year and to reach full manufacturing capacity in 2023.
The five Community Development Entity Lenders are: Texas Mezzanine Fund, Stonehenge Community Capital, Prestamos CDFI, Pacesetter CDE and MBS Urban Initiatives. U.S. Bancorp Community Development Corporation, the community investment and tax credit division of U.S. Bank, is participating as the NMTC investor. Project structuring and support was provided by Jennifer Veal, president and CEO of Community Inspired Capital Development LLC and the Law Office of Mark D. Foster.