Refinancing/Consolidation Helped Company Make It Through Tough Time

How Platinum helped owner to get positioned for a strategic buyer

Situation:

A 25-year-old global manufacturer and distributor — with 1200 customers located in 80 countries — experienced a dramatic reduction in revenue. The bottom line suffered and the company’s long-term, senior- secured lender called its line of credit, leaving the owner with limited access to working capital until a replacement source could be obtained.

Struggling with unprofitable operations and an eroding revenue base, the owner engaged Platinum Group to find a way to refinance the company. The owner sought the advice and counsel of Platinum because he lacked the depth and experience within his employee ranks.

Challenges:

  • The company’s long-term, legacy business was declining at a 7% annual rate as customers were upgrading to newer technology.

  • Company was operating inefficiently through multiple locations, consuming (rather than generating) precious working capital.

  • To find a new lender willing to refinance, the company needed to develop a growth strategy to enable it to project future profits.

Responses:

Platinum quickly identified those issues that would impede a successful refinancing and pragmatically sought their resolution. Operations in multiple locations were consolidated, resulting in a more efficient business with a reduced cost structure. Platinum helped facilitate the acquisition of a software company that provided critical technology, which repositioned the business for the future while diversifying core product offerings. Platinum led the refinancing, securing a new line of credit that enabled the existing bank to be paid in full and for the company to move ahead with confidence.

Results:

After 12 months of operating with the new financing, the owner is now positioned to exit the business. Platinum has negotiated two Letters of Intent from prospective buyers and a sale is in process to a strategic acquirer.

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