$600 million distributor of frozen seafood. Separate lobster procurement and processing operations on East Coast. $175 million bank syndicate loan.
- Company financial performance dropped from EBITDA of $25 million/year to $2 million/year as result of large inventory losses when frozen shrimp pricing dropped and losses on start-up lobster processing facility.
- Company had bloated inventory position with turns at 3X/year and almost $10 million of aged ineligibles.
- Losses on lobster processing operation were $4 million/year and could only be cut to loss of $2 million/year.
- Loan was a bank loan and company leverage was 5X under best case projections, so regulated bank lenders had to exit.
- Inventory needed to be reduced.
- Aged inventory needed to be sold.
- Money losing lobster production needed to be shutdown.
- Cash had to be managed to a borrowing base formula.
- Loan needed to be refinanced to an asset-based facility.
- 10-member bank group needed to be kept informed and supportive during the process.
- Inventory was cut by $25 million (over 20%) over 9 months.
- Aged inventory was sold and reduced from $10 million to $2 million.
- Money losing lobster processing operation was shut down.
- Company was refinanced to an Asset-Based Lender.