Equity Advisory

Equity / Management Advisory

 

Troubled situations often call for specialized knowledge and expertise outside the experience of even the most competent management. As Advisors, whether reporting to management or directly by the Board, Kestrel can not only supply such specialized expertise and strategic evaluation of a situation, but can focus exclusively upon the extraordinary challenges, providing management with supplemental resources and reducing the risk that the “crisis” will result in neglect of the day to day operations.

Selected Management / Equity Advisory Assignments

Design/Distribution Men’s Accessories

  • Engaged by management to budget, plan and prepare for a bankruptcy filing in response to deteriorating relationship between management and secured lenders.
  • Quickly identified basis of conflicts between parties. Stabilized lender relationship, identified short list of critical conflicts and actionable responses. Facilitated a short-term forbearance agreement with Senior Lender, out of court settlement of long term lease obligations, overhead reductions to achieve renewed profitability, and a long term debt refinancing.

Auto Parts Manufacturing- PA, U.K. and France

  • Recommended by sub-debt holders and engaged by equity to provide viability assessment and negotiate forbearance agreement.
  • Quickly identified key operating problems and triggered strategic re-evaluation. Stimulated cost containment and operational restructuring activities, guided revised financial forecast preparations and negotiated a loan forbearance / restructuring agreement with the Senior Lenders which provided time for stabilization followed by an orderly sale of the business as a going concern.

800 store Home Furnishing Retail chain.

  • Retained by equity sponsor after secured lenders demanded infusion of additional capital. Company was suffering from major competitive pressures of Home Depot while also having lost control of inventory and cashflow management during start-up of new computer system.
  • Installed new cashflow management system, closed stores, assessed business viability and recommended a chapter 11 filing. Due to losses of market position, business was ultimately liquidated.

European controlled Manufacturer of Industrial Electronics products

  • Retained by management of publicly held company with plants in U.S. and France to (1) install credible cash management systems in preparation for the need to secure D-I-P financing in a Chapter 11 filing and (2) provide an Interim VP-Mfg to correct production problems.
  • Quickly identified potential operational meltdown in bankruptcy due to need for single source, long lead time, parts sourced in Asia. Convinced secured lenders to advance new funds outside bankruptcy while production was stabilized and a pre-packaged financial restructuring negotiated.

Major publicly held U.S. Textile Manufacturer

  • Retained by debtor to provide viability assessment of business operations and forecasts after it reported large operating losses.
  • Demonstrated future profitability and advised Board of Directors and Senior Management during bank debt restructuring negotiations.

Successor to joint venture to exploit Developmental Products of two major food and chemical companies

  • Retained by equity sponsor after major legal problems developed which eliminated current earnings. Project involved installing cash flow control systems, evaluating strategic options for 19 separate product lines, restructuring operations and positioning business for a series of multiple sale transactions.
  • Operations were successfully restructured and a series of financial forbearance agreements negotiated as individual product lines were sold. All debt was paid in full with a spin-off to management of rights to certain high potential developmental products.

Synthetic Rubber Manufacturer

  • Engaged at the urging of the equity holders to evaluate a critical liquidity crisis, occurring only eight months after the Company executed a restructuring transaction transferring significant assets into a joint venture held in part by the parent corporation.
  • Viability assessment quickly revealed (1) massive post-restructuring management failures and resulting loss of confidence by key vendors and customers, compounded by (2) extended and continuing external market declines resulting in excess production capacity. Guided Company through a Chapter 11 filing, strategic sale of business as going concern and settlement of preference and fraudulent transfer claims between parent corporation and unsecured creditors.

150 store General Merchandise Retail chain operating in Great Plains States

  • Engaged by debtor to assess business viability following a sharp decline in profitability resulting from competitive encroachment from Walmart. Initiated a detailed store profitability and market assessment which led to a strategic repositioning.
  • Initiated Chapter 11 filing, closed 1/3 of the stores and re-focused on smaller markets, re-merchandised stores to invigorate and generate sales growth. Role included providing hotly contested valuation testimony in bankruptcy proceedings in support of the Plan of Reorganization.

$11 Billion Revenue Agricultural Business

  • Retained by debtor as requirement of creditors forbearance to analyze and evaluate business strategy and related forecasts of future operations.
  • Developed new refinancing plan which included strategic reassessment and plan for exit from a low return business segment; subsequently reduced working capital requirement by over $250 million.

Molded Plastic Auto Parts

  • Engaged by the Company upon recommendation of its senior secured lenders to evaluate refinancing requirements and/or possible bankruptcy filing.
  • Initiated strategic reassessment and restructuring of the business; including divestiture of non-strategic subsidiaries, stabilization of key customer relationships, consolidation of multiple plant operations, re-pricing / or orderly exit from unprofitable contracts. Negotiated an increase in borrowing commitment and extension of term from the existing lenders. Company was subsequently sold with a highly attractive return to the equity holders.

Repackager and distributor of Memory Chips

  • Engaged by Japanese parent to facilitate an exit from an under-performing US subsidiary with failing management relationships.
  • Negotiated a buyout by management and guided debt placement solicitation with US banks to facilitate completion of the transaction. Japanese parent achieved repayment in full of outstanding investment and retained 20% residual interest in post-buyout equity.

Manufacturer of Respiratory Support Products

  • Retained by company to evaluate integration strategy following merger of two largest industry manufacturers into a public company.
  • Evaluated product line over-laps, manufacturing redundancies and SG&A structure. Advised accelerated integration of product lines and major revision of promotional selling practices to eliminate artificial spikes in demand and inventories cycles. Simplified manufacturing, distribution and administrative processes.

Specialty yoghurt and baked goods Franchisor

  • Engaged by Company upon demand of secured lenders to prepare viability assessment and ratify budget forecasts in response to rapidly deteriorating operating performance and defaults on secured debt.
  • Assisted in identifying strategic re-prioritization, developed credible budget, and negotiated forbearance agreement among company, senior lenders and equity holders. Obtained time for operational stabilization and substantive simplification and re-capitalization of parent company balance sheet.