Undisclosed PE-Backed Services Company

Situation

The Company’s operations and financial position were severely impacted by the COVID-19 pandemic. 2Q 2020 revenues were materially off budget, and consistent monthly EBITDA generation became meaningful losses almost overnight.  The Company was going to be in violation of its leverage covenant by August 2020 and was also facing an imminent liquidity crisis in 4Q 2020 under its then-current capital structure.

Gordian was retained to negotiate a long-term solution to enable the liquidity runway, debt service relief and covenant flexibility to navigate through the recovery of the Company’s end-markets, the timing of which was uncertain.  The Sponsor was unwilling to commit additional capital to support the Company absent obtaining the necessary runway and Lender concessions.  Complicating matters, the Sponsor did not want to “blow up” the relationship with its creditors.

Prior to Gordian’s retention, initial discussions with Lenders yielded no results beyond offers of short-term forbearances that did not address the Company’s long-term issues. To bring the Lenders to the table constructively, Gordian and counsel (O’Melveny) designed a credible cram-up strategy that was presented to the Lenders alongside a consensual deal that included Sponsor capital.

Engagement

Sponsor-owned, the Company is a leading provider of services to consumer-facing industries indirectly relating to the Events sector.  Prior to the COVID-19 pandemic, the Company had annual revenues and EBITDA of over  $250 million and $25 million, respectively. Gordian Group was engaged to provide a financial restructuring strategy that provided the Company with significant cash debt service holidays and covenant relief.

Outcome

The Company and its Lenders quickly reached a consensual resolution that provided significant debt service relief, as well as covenant runway into 2022.  The Sponsor contributed minimal new capital and old equity maintained its 100% interest in the Company.