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 1,200 customers 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-percent annual rate as customers were upgrading to newer products made by others.
  • The 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 profitable revenue increases.

Responses: Platinum quickly identified these and other 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.