Operational & Financial Restructurings
Opportunities for creating value through restructuring are necessary as a result of such factors as economic uncertainty, changes in technology or manufacturing processes, heightened marketplace competition, regulatory or tax requirements, shifts in interest rates, or changes in business practice efficiency and performance. SOLIC Capital Advisors’ credentialed Restructuring professionals have multidisciplinary backgrounds with experience from international accounting firms, merchant and investment banks, private equity and hedge fund firms, and senior operating management. From a broad array of industries, our team possesses the expertise to evaluate and customize optimal capital and operational restructuring processes resulting in sustainable value.
SCA’s comprehensive range of operational and financial restructuring services include:
- Market analysis
- Strategic review, positioning, and plan development
- Company core-competencies and SWOT analysis / competitor analysis
- Ability to effect strategic alternatives necessary to maximize value for all constituents
- Product/service offering analysis
- Historical financial performance validation
- Performance improvement initiatives review and implementation
- Development of valuation and debt capacity analyses
- Cash management and controls / liquidity analysis / cash flow forecasting
- Organizational assessment and business plan validation
- Optimal value recovery analyses including sum-of-the-parts versus whole company analysis
- Strategy support and negotiation leadership, including constituency management
- Operational wind-down oversight and implementation
- Cost structure reductions and active liquidity management
- Plan execution
- Formulation of management retention and incentive programs
Our financial, operating, and legal acumen helps clients improve operating performance, restore and enhance profitability, and maximize recoveries. We assist companies who are in distress or affected by insolvent entities through the entire lifecycle of a restructuring: from a front-end assessment, to effective decision-making support, through the implementation of transaction solutions. Representative case studies of work performed by SCA professionals include:
Retained by Bosque Power Company, an owner/operator of a natural gas fired power plant providing energy and ancillary services to the Texas power market. SCA professionals provided a review and assessment of the Company including: financial performance and forecast, competitive position, viability of the Company’s business plan, and senior debt transaction documents.
SOLIC serves as financial advisor to Energy Future Holdings Corp. (the parent of TXU Energy, Luminant Generation, and Oncor Electric), a $6.2 billion revenue / $33 billion asset power generation and downstream delivery company, pursuant to the authority delegated to and under the direction of the Chairman of the Board and its disinterested directors. Energy Future Holdings at the time of its Chapter 11 filing was capitalized with in excess of $40 billion of debt and $8.0 billion of equity and sought to retain SOLIC because of SOLIC’s recognized expertise and extensive experience and knowledge in providing restructuring and financial advice in connection with distressed companies. SOLIC’s services include but are not limited to, review of its contemplated plan of reorganization, intercompany claims, financial elements of tax related issues, financing proposals and future financing needs, and other such restructuring matters as required and agreed upon.
GMAC ResCap was the second largest independent residential mortgage lender in the U.S., originating first and second lien residential mortgage loans through a nationwide network of retail offices, direct lending centers and internet sites. SCA professionals were retained to create and execute a plan to mitigate the negative impact caused by the downturn in the subprime and home building market. SCA professionals worked with management to create and execute a detailed risk mitigation plan. Managed total aggregate exposure in excess of $15 billion including the orderly liquidation of the largest mortgage warehouse lending portfolio in the U.S. SCA professionals specific tasks included:
- Creation of a 70 person special assets team;
- Development of collateral monitoring and exposure management systems;
- Assistance with respect to the loan sale execution process responsible for disposition of over $3 billion of mortgages; and
- SCA professionals negotiated and implemented bankruptcy strategies associated with maximization of value of distressed debt in connection with the largest subprime origination and homebuilder bankruptcies.
The Hartz Mountain Corporation manufactures, distributes and markets pet supply products in a multitude of distribution channels including toys, health and beauty and OTC health remedies with revenues of $350 million, senior debt of $90 million and sub-debt of $75 million. SCA professionals retained by the Company to review their short and long-term business plans and amend the existing credit agreement with the Company’s senior secured lenders. SCA professionals’ recommendations were all ultimately approved by senior and subordinated creditors, and provided significant flexibility for the Company to implement its operational and strategic plans.
Leiner Health Products was the nation’s largest private label manufacturer of vitamins, minerals, nutritional supplements and the second largest manufacturer of private label over-the-counter (OTC) pharmaceuticals in the U.S. with revenues in excess of $600 million, senior secured debt of approximately $275 million and sub-debt of $100 million. SCA professionals retained by senior lenders to lead in a capital restructuring effort that, through a pre-packaged plan of reorganization, resulted in a 100% claim reinstatement to the senior secured creditors at markedly improved risk adjusted returns.
Protocol Communications, Inc. is an integrated direct marketing Company serving businesses in the combined areas of direct marketing, data and production services, lead management solutions, contact centers, and media replication and fulfillment services with $18 million of EBITDA. SCA professionals were engaged by the Company’s holders of $115 million of senior secured notes to evaluate capital structure alternatives, various operational restructuring scenarios, and the Company’s short and long-term financial plans. SCA professionals successfully negotiated with subordinated debt holder a debt to equity conversion, and in January 2006, the Company emerged from bankruptcy with $85 million of senior debt with the senior lenders owning 58% of the Company’s new equity.
SCA professionals were engaged to perform services in connection with reviewing and evaluating the contemplated development of and future prospects relating to 610 Lexington in New York. In addition to evaluating strategic alternatives, SCA professionals provided financial and advisory support, including: assessment of alternatives, opportunities and risks to maximize recoveries related to outstanding credit agreement; alternative use and valuation analyses related to the land; development of potential restructuring/recovery plans; and, implementation of restructuring initiatives including direct discussions and negotiation with creditors, investors, and other stakeholder constituents.
SCA professionals were engaged by a real estate private equity fund in connection with the restructuring of its majority ownership interests in a joint venture partnership that owns Sunrise Senior Living, consisting of 16 senior living communities in 11 states. On behalf of the fund, SCA professionals led negotiations with the joint venture partner, their representatives, and major financial institutions in connection with transferring minority interest to the fund, replacing the property manager, and amending credit agreements.
Tensar Lease Funding Corp. is a special purpose finance vehicle consolidated by Tensar Corporation, a U.S.-based multinational holding Company whose subsidiaries develop and manufacture an integrated suite of construction-related products and services that provide soil stabilization, earth retention, foundation support and erosion and sediment control for infrastructure end-markets. SCA professionals engaged to provide financial advisory services to optimize the Company’s cost of capital, including an assessment of current projection model and business plan, and analysis of capital restructuring alternatives (valuation analysis, debt capacity analysis, and capital structure modifications)
Health care network consisting of a tertiary care facility, a nursing home, and 60 outpatient clinics. SCA professionals assisted the board of directors with the development of a capital and operating restructuring plan, obtaining a $30 million capital infusion, the sale of an outpatient imaging center, the spin-off of a clinic supporting developmentally disabled patients, renegotiation of an affiliation agreement with a local medical college, a general reduction in force, and the outsourcing of various service offerings. SCA professionals assisted the board of directors in the development of appropriate governance structures for its academic medical center, its affiliated Children’s Hospital, and other affiliated entities. SCA professionals assisted the board in long term strategic planning, including review and supplementation of management team, as well as selection of a new CEO. Analyzed physician compensation arrangements, including medical malpractice program, and then renegotiated all physician contracts in order properly align interests. SCA professionals implemented cash flow controls and forecasting, including 13-week cash flow forecast and ongoing contribution modeling. SCA professionals negotiated extensions to commercial paper program, conducted a business unit contribution analysis, and then recommended and implemented various closures and divestitures.