Company Recapitalized Successfully

Challenge

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Collection Agent that provides skip trace, charge-off services and mortgage collections. $90 million in Revenue. $50 million in Debt.

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• Company had weak financial presentation and controls.
• Trust accounts where not swept and excess balances where maintained.
• Customer concentration concerns and business development risk.
• The Company made large acquisitions which taxed their credit availability. Large balloon and debt service payments due.
• PE firm was not willing to commit funds and recapitalizing with new debt was unlikely.
• The Company needed additional working capital to replace lost customers with new customers.
• Primary lender lost faith in restructuring plan and company.

Solution

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• Morris Anderson (MA) prepared a feasibility analysis and business assessment that included detail reconciliations of trust accounts and accounting concerns of the lender. MA recommended solutions and corrective actions put in place by the Company that freed up additional working capital to bridge short fall.
• MA worked with management to present cash flows , projections and other reporting used to give lenders and PE firm better visibility and understanding of operations. Including cost cutting, liquidation analysis and risk analysis.
• MA used their favorable relationship with lenders and PE firm to facilitate negotiations and give independent reliable recommendations.

Results

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• MA was able to resolve critical trust account issues and accounting concerns for lenders and owners.
• MA served as primary negotiator with PE firm and lenders to complete recapitalization.
• MA presented reliable projections and analysis that was used to support transaction, negotiate valuations and clarify accounting concerns that lead to closing the recapitalization.
• MA reconciled and resolved trust accounts which facilitate the lenders transfer of cash management.