Resizing Company Leads to Refinancing

50M

Annual Sales

16M

in Debt

KingKutter, Winfield Alabama

Manufacturer of Rotary Mowers and Farm Equipment with revenues of approximately $50 million. $16 million debt.

Projected cost savings did not materialize as recession caused drop in revenue and profitability
In addition, ownership and control issues caused further liquidity strains
Company had lost almost 20% of its revenue as a result of the Great Recession and a key customer revenue decline.
Margins at lower revenue levels could not support fixed operating and manufacturing costs.
Cost cutting efforts fell short of achieving profitable operations.
Company faced a significant crossroads as it was also engaged in an ownership struggle between father and son.
Bank was pressuring company to find a new lender.

MorrisAnderson (MA) quickly analyzed the macro, micro and Company’s situation to conclude that:
While the company initially reacted slowly to the economic downturn, it had since appropriately right-sized operations
Company had a sound business model.
Company had a focused sales effort and product strategy that was strategically sound and should yield strong results.
MA reviewed Company forecast assumptions for reasonableness – flowed them through an integrated model which showed that cash flow and availability would be sufficient to fund operations and service bank debt.
MA worked with senior management to resolve ownership issues and formalize management succession plans, which were critical to business continuity.
MA’s validation of the business plan and cash projections gave the lender comfort to allow the company adequate time to seek refinancing.