NextLevel Partner Assists Manufacturer to Restructure and Improve Debt Lines
NextLevel was engaged by a heavy equipment manufacturer to guide and assist in securing new banking services. The company competes in a global marketplace with revenues of more than $100 million and a recent growth rate of 5-10% per year. Due to both internal and external factors the company had significant losses in 2017. Subsequently the internal problems were corrected and the industry returned closer to normal making 2018 a profitable year, however, domestic, export and standby lines of credit were needed.
The challenge for NextLevel was to secure financing in a fairly short time frame to replace the existing bank with a lender who could see and understand current and projected results vs. the loss year, and who had the ability to provide both domestic and export financing. Further, the company received progress payments on the current projects, causing issues for some lenders due to receivables and inventory cash flows not matching to actual delivery.
A NextLevel partner met with the CFO to establish a workplan that could allow for the speed and completeness needed for success, and then worked in a “hands on” fashion to contribute at every step along the way to:
1. Establish and use a Data Room for completeness, accuracy, and speed by;
- Implementing the Data Room and defining an index for all needed data
- Populating needed data files
2. Prepare a three-year forecast, including balance sheet, income statement, and cash flow
3. Write a management discussion and analysis (MD&A) for the lenders, their credit managers and underwriters. Included in the MD&A was a discussion of the issues in 2017, the corrective actions and turnaround in 2018, the backlog, and the assumptions used in the projections.
Three banks progressed to the Term Sheet phase. The bank selected was able to provide all the facilities requested with terms, pricing and fees lower than the current bank. They were also able to improve the advance rate on the collateral by creatively solving for the progress billing nature of the business. Finally, the owners were able to obtain financing without giving personal guarantees, a first for the company.