Restructuring Advisory
Situation Overview: Middle market distributor of specialty fixtures with approximately $50 million of revenues. Highly dependent on commercial and residential construction, the Company experienced substantial declines in performance beginning in late 2008.
- The Company realized significant declines in revenue and EBITDA, resulting in covenant defaults with its lenders;
- Revolver availability was restricted causing near-tem liquidity constraints;
- Senior lender prepared to exercise rights and remedies; Equity and mezzanine positions significantly impaired;
- Sponsor willing to support the business by investing additional capital.
Engagement Summary: VPS worked quickly with management and the sponsor to implement an enhanced reporting package and communication regimen with the lenders leading to the negotiation of a 90-day, short-term forbearance agreement with lenders to allow time for the implementation of longer-term restructuring plan. Once executed, VPS was able to work with both senior and mezzanine lenders to negotiate a two-year amendment that provided: (i) continued access to revolving credit facility, (ii) covenant relief; (iii) modified amortization schedule to reflect forecast performance level; and (iv)partial debt to equity conversion of the mezzanine tranche. VPS formulated and prepared restructuring presentation for the lenders, facilitated communications between all parties, and negotiated key restructuring points on sponsor’s behalf.
Capital Raising
Situation Overview: Middle Market Packaging manufacturer with $60 MM of Revenues / $6 MM of EBITDA. Won substantial contract with existing customer that required $8.5 MM equipment purchase.
- Business operates with part-time CFO and maintains limited financing relationships;
- Proforma leverage profile in excess of industry standards for similar businesses;
- Abbreviated time frame given immediate need for large down payment on equipment;
- Process complicated by concurrent renewal of line of credit with existing Bank;
- Location of business and long term financing structure ruled out numerous financing sources;
- Size and nature of engagement ruled out other advisory firms.
Engagement Summary: VPS quickly assembled a list of over 30 viable financing sources, prepared offering materials and managed communications with potential lenders. VPS’ involvement has not only provided attractive structure and rate alternatives, but allowed management to focus on contract negotiations and the renewal of its line of credit.