MorrisAnderson Assisting Lenders Restructure Debt

Challenge

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Manufacturer of video delivery products. Annual revenues of $35 million. $17 million debt. Approximately 180 salaried and hourly employees in 2 locations.

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• Company experienced sharp revenue decline over 2 years as a large percentage of sales related to the conversion of Analog to Digital conversion in the US markets
• Operating costs were not addressed quickly enough, resulting in significant liquidity constraints and cash burn
• Although management and the equity sponsor implemented an aggressive turnaround plan, leverage remained high and senior lender group did not have the details of the turnaround plan

Solution

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• MorrisAnderson worked closely with the Company’s senior management team to review prior restructuring initiatives, vet current business plan assumptions and assist Company in assembling a comprehensive turnaround plan to present to the lenders
• Additionally, MorrisAnderson assisted the senior lender in developing a covenant package that allowed the Company to execute its turnaround plan
• MorrisAnderson worked closely with the senior lenders to evaluate alternative restructuring options

Results

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• Company and equity sponsor were able to work with the lenders on an amendment to the credit agreement which included a renegotiated covenant package
• The Company was pleased with MorrisAnderson’s assistance and guidance during the assessment and bank negotiations and agreed to have MorrisAnderson stay on to monitor management’s progress on executing its restructuring plan