Debt Restructuring Provides 100% Loan Recovery

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Challenge


  • With $30 million in annual sales, this company provides wireless service in the rural Heartland, using GSM format as an affiliate of a major international wireless service provider, T-Mobile.
  • Company was highly leveraged with $50 million in debt, but was otherwise a well-managed and modestly profitable company in the mid stages of turnaround with its “second” management team in place who had replaced the “spend and grow” team a few years earlier.
  • At issue was the lenders’ concern about the company’s ability to meet its highly aggressive growth plan in a weak telecommunications market and hence its ability to repay its loans given its modest EBITDA.

Solution

  • Provided an assessment that helped the company reset its financial plan to ambitious yet achievable levels, installed our 13-week cash flow projection tool to manage tight liquidity, relieved day-to-day lender pressure on management and helped improve the financial-control infrastructure.
  • Developed financial restructuring plan.

Results

  • Initiated and negotiated a financial restructuring plan involving $4 million of new capital raised and the conversion of senior debt to sub debt and equity to right-size the balance sheet.
  • This restructuring provided the secured lender with a high probability of 100% recovery of its loan over a five to seven year horizon.
  • The Company is performing in line with its more realistic growth and profit plan and is now properly capitalized for reasonable growth.

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