Create breathing room
Negotiated temporary interest and principal relief with lenders so management could stabilize operations and execute a recovery plan.
Selected work · 03
Restructuring · Refinancing · Ownership transition
Restructuring an underwater balance sheet
An underwater balance sheet was restructured while the business recovered from a severe downturn.
The situation
What was at stake.
Revenue declined by 60%, financial covenants were breached and both lenders wanted to exit. The balance sheet was underwater and the company could not meet scheduled interest and principal payments.
The immediate objective was to create enough time for the underlying business to recover while finding an ownership and capital structure acceptable to every stakeholder.
The work
A focused path from problem to outcome.
Restructure the balance sheet
Worked with the board and private lender on a debt-to-equity conversion that materially reduced leverage and enabled an ownership transition.
Replace the senior lender
Ran a competitive refinancing process and secured a new senior facility with more affordable and flexible capital.
Results
What changed.
+300%Revenue from the low point
RepaidExisting senior lender
ConvertedPrivate debt to equity
CompletedOwnership transition
The company refinanced with a new senior lender, repaid the incumbent bank, converted private debt to equity and transitioned ownership while revenues recovered substantially from the downturn low.
Why this experience matters
A workable capital structure can preserve a viable business through a severe downturn.
The operating business needed time that its existing debt structure could not provide. Coordinated lender relief, balance-sheet restructuring and replacement financing allowed the recovery to continue while ownership transitioned on workable terms.
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