Services: Access to Capital, Financial Advisory Industries: Basic Industries/Distribution/Business Services, Metals & Mining Professionals: David Herman, Peter Kaufman Business Profiles: Private Equity / Entrepreneur Representations, Shareholder Successes
Gordian was engaged to provide advice in connection with the impending maturity, ultimately negotiating a consensual restructuring avoiding a bankruptcy filing and extending the maturity of the note by two years.
Client: Gordian was engaged by the portfolio company of an undisclosed private equity firm
The Company had an upcoming liquidity crisis with the impending maturity of more than $120 million of debt, > 6.0x trailing EBITDA.
Gordian was engaged to provide advice in connection with the impending maturity. While a small piece of the outstanding debt was in the form of a revolver, the bulk of the debt was comprised of second lien notes, of which a loan-to-own hedge fund (with other strategic interests in the space) owned close to 90%.
Following several months of off-and-on discussions with the hedge fund (who had taken the position early on that they required control in any consensual transaction), the negotiating dynamics shifted after Gordian effected a transfer of the revolver to a more aggressive senior lender that was willing to convert the revolver into a term loan, effectively pre-funding any potential bankruptcy.
As soon as negotiations recommenced however, a fire at the company’s primary facility in late 2012 caused significant production disruptions that created further uncertainty.
Ultimately, Gordian and the company were able to negotiate a consensual restructuring with 100% of the note holders that:
- Avoided a bankruptcy filing;
- Included only 10% dilution to the private equity sponsor (provided the notes are paid off prior to maturity); and
- Extended the maturity by close to two years, providing time for the client and private equity firm to reduce leverage and increase shareholder value.