CRP was hired to advise this $275 million in revenue global logistics transportation company in the restructuring of their capital structure. CRP solicited a new senior lender who offered an attractively structured and committed new senior debt facility. CRP also advised Summit in the structuring discussions with potential minority equity investors. A large public foreign strategic buyer, who had been in discussions with Summit, then offered a very aggressive purchase price which management accepted. Management felt that the restructuring alternative was accretive to their negotiations with the ultimate strategic buyer and properly compensated CRP.
This company, which fabricates customized rigid tubular assemblies for aircraft engines, entered into a chapter 11 bankruptcy process in March 2009. CRP was hired in late August to conduct a 363 sale of Tube Bends’ assets. In April 2010, Tube Bends was sold to an experienced financial buyer. One difficult factor was that before CRP was engaged two key customers had begun to move their business to other vendors. Nevertheless the process was a success. CRP has completed eight 363 sales over past years.
MidCap Business Credit
CRP advised the owner of MidCap Business Credit in the December 2009 sale of MidCap which required the raising of sufficient new capital to repay approximately $7 million of subordinated capital to a hedge fund. MidCap lends $2 to $6 million to non-bank customers secured primarily by accounts receivable. MidCap had incurred no credit losses on its portfolio since its inception six years earlier. The hedge fund had requested to be repaid due to redemption issues over a year earlier which were unrelated to MidCap, but which precluded MidCap from making new loans due to the hedge fund’s cash constraints. The owner also wanted to sell all or a portion of the company for estate planning reasons. The process began in early 2009 as the markets had severe issues. CRP diligently advised MidCap through all stages of the process including legal documentation.
William Pitt Sotheby’s Realty
In November 2008, CRP advised this real estate brokerage company, William Pitt Sotheby’s (“WPS”) in the raising of approximately $7.5 million of debt and equity. WPS has the exclusive Sotheby’s real estate brokerage franchise for most all of Connecticut and was the largest Sotheby’s independent real estate franchisee in the world. The owners had utilized their liquidity in the expansion of their company over recent years when the worst real estate downturn in decades crushed the market in this state as well as across the US. A strategic investor recognized the long term value of WPS as well as its benefit to their real estate development business. The process was a long one as the real estate market deteriorated, but ultimately CRP and WPS were successful in achieving their goal of finding the necessary capital to be able to weather the very difficult market.
Westar Satellite Services
In May 2008, CRP sold a small Texas-based telecommunications company, whose primary asset was a teleport facility, to a privately owned strategic buyer who wanted to expand their transmitting capabilities. CRP executed an extensive marketing program, contacting over 100 potential buyers. CRP was able to attract multiple bids including one from a Fortune 50 company. A long term new contract helped to justify a very attractive price more than the current level of earnings. CRP advised the client through all aspects of the transaction including a long and difficult negotiating process.
Subrogation Partners (2 transactions)
In the first transaction in late 2004, CRP advised a small insurance subrogation third party administration company, Subrogation Partners (“Subro”) in the raising of $4.65 million of equity and a $100 million debt facility. One of the cornerstones to the transaction was Subro’s new strategy to enter into a new asset class which had never been traded before - purchasing subrogation claims from insurance companies and captive insurance subsidiaries of corporate parents. Adoption was slower than anticipated and the pricing delivered sub-target returns for the hedge fund who had funded Subro. After modest success, management decided in 2007 to sell the company. In the second transaction in early 2008, CRP sold Subro to the large public insurance brokerage and consulting entity, AON. The transaction was very complex and required that AON understand the complicated Subro history.
Thunder Creek was a $25 million in revenue producer of silk screened shirts for many of the major retailers. Sales had grown substantially and management felt they needed subordinated financing to fund an increasing seasonal working capital need caused by their dramatic growth. CRP advised that it would be less expensive and more efficient to restructure their senior facility to include an overdraft ability. CRP knew the senior lender well and was able to orchestrate the structuring of a new lending facility which included availability of seasonal funding to cover the working capital needs without sacrificing any equity. CRP’s strong, long-standing relationships with senior management of the lending institution enabled this growing company to get greater visibility within the lending organization. CRP has since provided advice concerning potential acquisitions.
Power Communications Services
Power Communication Services (“Power”) was a leading provider of specialty telecommunications contracting services for infrastructure projects in the New York tri-state area. CRP sold Power out of bankruptcy through a 363 sale process and was successful in attracting multiple bids from strategic parties which resulted in a bidding war and an end value that exceeded price expectations.
Diamond Business Credit
CRP advised Diamond business Credit (“Diamond”) in the raising of senior debt, subordinated debt, and equity. Diamond lends $50,000 to $1 million to small businesses who cannot get bank financing. They lend against receivables and other tangible assets, and get very attractive all-in rates of return. The owners had recently resigned from another firm who had a similar strategy and had just formed Diamond. CRP advised and was successful in the raising of all three levels of capital for this “restart” and has since advised management in relation to potential acquisitions.
Biotech was a manufacturer of nutriceutical products that are sold though large retail chains and small specialty shops. CRP was advising Biotech in an effort to raise growth capital when an opportunity arose to sell their leading brand to a public company, Natrol, which allowed the owner to keep his company and continue to develop other nutriceutical products. CRP advised Biotech through the entire process. The owner received a price which, depending on the future revenues of the product, was between approximately one and two times net sales.
Align General Insurance Agency
An impressive entrepreneur had recently begun a master insurance agency (“Align”) having successfully operated another agency owned by a wealthy entrepreneur for a number of years. CRP advised him in the raising of $1.25 million of equity capital. Within 18 months, the entrepreneur was approached by a strategic buyer and sold the company for over twice the “post money” valuation of the original transaction.
CRP advised this distributor of airport ground support equipment parts (“Sage”) in the raising of $3 million of subordinated capital. At the time the airline industry was going through a particularly difficult period. CRP recommended a funding source in order to bridge the company to a better economic environment for the industry. This funding source specifically specialized in bridge loans and did not take a meaningful amount of equity. Sage has recently been sold. The owners were able to retain more of the proceeds due to the type of financing recommended by CRP.
American Home Partners
CRP advised this specialty finance company (“American Home”) in raising $5 million of equity, $5 million of subordinated debt and $24 million of senior debt. American Home’s program enables first time home buyers who cannot afford a down payment to act as their own general contractor and they also provide the necessary financing for them to own their first home. This unique strategy is a compelling story, but one that required a clear, well thought out articulation to successfully market the transaction.
Veracor was a small importer of specialty plywood. CRP advised Veracor in the raising of $25 million of a unique form of purchase-order debt financing which enabled them to finance purchase orders of a large retailer and alleviated the need to raise equity capital.
Clinical Financial Services
Clinical Financial Services (“CFS”) provided debt financing for those that perform clinical trials for the major pharmaceutical companies. CRP advised CFS in the raising of a $6 million high yield credit facility. This transaction required a unique funding source to understand these types of receivables which normally take 120 days or more to be paid but are very solid creditworthy assets.