Quick Sale of Trucker to Avoid Liquidation

OrTran

Kansas City, Missouri

Challenge

Full Truckload Trucker. $18 million sales. $11 million debt


  • Financially Imploded attempting rapid growth in declining rate market
  • Historically $2 million EBITDA generated from $26 million revenue; debt = $6 million.
  • 20+ year old company decided to implement new logistic strategy and expand by 100%; incurred debt to acquire 60 more tractors; increase lease obligation with 120 additional trailers.
  • Impact was $1 million EBITDA generated from $23 million revenue; debt = $13 million.
  • The volume dropped so ($3) million EBITDA generated from $13 million revenue. OLV was estimated to be $6 million. Note: the facility was leased from another company with the same owner but separate from the loan agreement.
  • MA started engagement 2nd week of October, lender wanted out by end of year.

Solution

  • First 4 weeks: terminate logistics strategy, sell excess tractors and turn in excess trailers to lessor. Discontinued unprofitable lanes; began rebuilding brokerage business. Developed plan and submitted to lender.
  • Second 4 weeks: entered into discussion with several investors and strategic buyers. Investors impressed with turnaround and forward prospects but still over leveraged. Reached agreement with lender to sell assets in conjunction with reduced obligation for the personal guarantors.
  • Third 4 weeks: Quickly narrowed field of prospects, entered into LOI in week 10 and closed on the sale in week 12. The transaction agreement included a 60‐day Transition Services Agreement that helped fund wind‐down costs.

Results

  • In just 12 weeks MorrisAnderson stopped the cash bleed and closed on an out‐of‐court asset sale of the uninterrupted business
  • The sale closed on December 30th with the business not being interrupted, most employees retained their jobs.
  • For the Owner, MA obtained more than $1.5 million more in sale proceeds vs OLV, a reduced loan payoff that saved the owner/guarantor from personal bankruptcy, an employment contract, and viable tenant lessee for the facility.
  • The Lender recovered more than planned and was able to clear the loan off its books at year‐end.
  • All parties avoided publicity that a court action would have amplified.

Daniel Wiggins

Daniel Wiggins is a Managing Director at MorrisAnderson with notable turnaround and transaction experience. In building value for his clients Daniel focuses on enhancing stakeholder relationships that optimize business continuity and he frequently leads negotiations with clients’ key suppliers, customers, and lenders – particularly during restructuring initiatives. An additional focus of Daniel’s engagements is mentoring… Read More