Assessment Aids in Loan Amendment

Challenge

$90 million manufacturer and distributor of wallpaper, wallcoverings, and interior décor. $35 million debt.


  • Company sales declined more than 10% over two years due to economic weakness in several key foreign markets including Russia and Brazil and the waning popularity of licensed peel-and-stick wallcovering products related to the “Frozen” movie franchise
  • Organic residential wallpaper demand has been steadily eroding for decades, though some signs of increased adoption in the United States was present in niche markets
  • York was purchased by private equity in a leveraged buyout at the height of its revenues; sales declines led to EBITDA that was half of that at the time of acquisition and widespread covenant defaults
  • Company was pursuing a risky turnaround strategy focusing on new products for interior décor
  • Senior lender was questioning whether the business was viable and whether a restructuring or a liquidation should be pursued

Solution

  • Comprehensive assessment of the financial performance of the company relative to the capital structure and likelihood of achieving the turnaround projections
  • Evaluate new company president and overall management team and their ability to execute the proposed turnaround strategy
  • Recommend potential restructuring concepts and help broker an agreement between the lenders and the company to provide a stable path forward

Results

  • Lender provided covenant waivers and amendments to allow company to pursue its strategy without requiring additional capital investment by the private equity owner

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More