Gordian was engaged by a Software as a Service Company; the Company successfully raised additional capital and a restructuring agreement was secured.
Undisclosed Software as a Service Company
CLIENT: Undisclosed Software as a Service Company
When Gordian was engaged, the Company was about to be awarded a large public sector contract but was simultaneously in covenant default under certain of its lending agreements preventing it from obtaining the requisite bonding levels. The Company was also facing a liquidity crunch with certain vendors demanding payment, in part a result of a broken sale process (pre-Gordian engagement) for one of its businesses.
Gordian was engaged by the Board of Directors to lead negotiations with its secured lenders and subordinated debtholders to execute a deleveraging plan, while securing new-money and bonding capacity to provide the Company runway to execute its business plan and realize the benefits of the recently awarded contract.
The Company’s fundamentals were deteriorating due to negative headwinds and a flawed execution strategy, forcing its lenders to exercise their rights with respect to reporting requirements, and other time-consuming activities, impeding the CEO’s ability to focus on the core business.
Gordian and the Company successfully raised the additional capital needed to “plug” short-term cash needs, including the collateral required to obtain the bonding necessary to execute on its recently awarded contracts. Gordian also secured a restructuring agreement, whereby the sub-debt holders converted approximately 50% of their outstanding debt into a minority (less than 35%) of the restructured Company’s equity, while also providing the ability for old equity to claw back almost all of that based on meeting certain performance metrics. This maintained old equity’s majority equity position.
As part of the transaction, the Company also obtained a forbearance agreement with the Company’s Senior Lenders that provided the Company with additional runway to both implement its strategy and pursue other strategic alternatives.