Profit Improvements Facilitates Refinancing

Challenge

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$3 million Cocoa Product Distribution. $6 million of Term Debt and $2 million Real Estate Debt. Company had operated as a joint venture for 20 years. Owners each required to loan $3.5 million to the venture.

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• Company invested in the construction of a cocoa deodorizer at a cost of $13 million.
• Company was $2.4 million over budget and 6 months delayed with a projected $1.1 million of start-up expenses required.
• Company operations had been low tech and basic. New operation was highly technological and quite complex.
• Company had historical revenue of $2.5 million with $0.5 million in EBITDA.
• Projections were for Revenue to Increase to $5.5 million.
• Bank had lost confidence in Ownership due to missed projections and cost overruns.
• One owner had $22 million in outstanding real estate debt outside company with current bank.
• Joint Venture Partners not agreeing on the direction of the company and had very caustic relationship.
• Start-up issues resulted in losses in the first 2 months of operations.

Solution

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• Worked with Senior Management to identify causes of excessive start-up costs and assisted in containing the costs.
• Worked with Management to identify needs of company for long term success.
• Created 2 year Financial Projections to help bank better understand the long term outlook of the company.

Results

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• Company quickly turned profitable and was realizing $200K/month of EBITDA.
• Presentation and analysis helped find refinancing of current loans.
• Acted as an independent voice for to joint venture and communicated plans with both groups.
• Acted as an independent voice to banker. Kept bank apprised of situation to gain confidence in restructuring plan.