Category Archives: Capitalize | Corporate Finance

Bara King Photographic

The Company

Bara King Photographic

This company was a Washington, DC area photo lab with significant government contracts.

The Challenge

The owner wanted to retain 100% of the stock of the company, but needed to raise new money.

The Process

Equity Partners was retained, and simultaneously sought joint venture partners for the business and buyers for the building.

The Solution

Equity Partners brokered an all cash sale/leaseback of the Debtor’s building, which allowed the Debtor to pay off its secured creditor and to continue operating in the same location.

Bartlett Management Services, Inc.

The Company

Bartlett Management Services, Inc.

Chain of 30 Kentucky Fried Chicken franchises located in IL, WI, and IN.

The Challenge

Costs involved with equipment leases, a management/advisory agreement, and real property leases, as well as the recession of 2008-2010, resulted in a decrease in revenue, and an inability to sustain positive cashflow, ultimately leading the Company to seek Chapter 11 bankruptcy protection.

The Process

Equity Partners was retained to seek an investor, joint venture partner or buyer for the operation and conducted an exhaustive marketing process that resulted in 70 groups conducting due diligence, with 9 of those groups engaging in significant discussions about the opportunity. In order to become a qualified bidder, interested groups were required to not only show financial wherewithal to purchase the operation, they also had to be qualified by KFC Corporate to be a franchisee. The Debtor’s professionals also had to negotiate revised building leases with 13 landlords that would be acceptable to a new buyer.

The Solution

Ultimately 3 groups submitting offers by the bid deadline, and 2 of those groups were qualified by KFC Corporate to participate in the auction. After numerous rounds of bidding, EYM Foods II, LLC was deemed the winning bidder and proceeded to close and operate the restaurants.

Bay Country Communications

The Company

Bay Country Communications

This Maryland-based cable television provider serving Dorchester County.

The Challenge

The company was forced into bankruptcy due to a technical default with the lender on a separate investment property. Stock in the company had been used as collateral on the loan and as a result of the default, Bay Country filed bankruptcy as a means to hold off the creditor from foreclosing on the company.

The Process

Equity Partners was retained to quickly market the company for a sale or to facilitate a restructuring of existing debt. Shortly after going to market, we generated interest in the opportunity from over 40 groups, including larger national and regional cable providers.

The Solution

Through discussions with interested groups, Equity Partners validated that the proceeds from a sale would likely never go beyond the debt of the company and therefore not flow through to the outside lender. With this information in hand, the owner negotiated a settlement with the lender for a fraction of the original debt and Bay Country was able to exit bankruptcy and resume business as usual.

Cosmos Granite and Marble Central

The Client

Cosmos Granite and Marble Central

This Midwest division of a larger family-owned business had branches in Chicago and St. Louis and was undergoing a partnership dispute and a recent decline in sales.

The Challenge

Sales had dropped by 20% and the value of the business was declining rapidly. Litigation had already led to a breakup of the parent entity and, due to financial limitations, the manager of this division could not buy the division on his own.

The Process

The business was put into a Receivership and Equity Partners was hired by the Receiver and immediately went to market looking for a buyer for the division. Within 45 days, EP created sufficient interest to hold a lively auction for the business. Four buyers participated in the auction.

The Solution

Equity Partners ran an auction of going concern bidders and, following 16 rounds of bids, the business was sold for nearly two times the original bid. The secured debt was paid in full, most liabilities were assumed, and the business continues to operate today.

Costrotta Construction Management, Inc.

The Client

Costrotta Construction Management, Inc.

A New Jersey-based full turn-key construction, site acquisition, staffing, technical services, in-building, DAS and project management company for the wireless and fiber industries.

The Challenge

The existing secured lender had gone through a series of forbearance agreements and was restricting the company’s access to capital. Because much of its collateral was made up of “completed not billed” work, most lenders would have no interest.

The Process

With the company lacking capital for continued business growth, they retained Equity Partners to find a new source of financing to allow the company to continue growing, once properly capitalized. Equity Partners placed a CPA consultant within the company to run diligence and work with the secured lender throughout the process. We launched an intense international campaign seeking refinancing for the company, as well as potential merger partners.

The Solution

Through our involvement we were able to hand hold the secured lender and ensure they provided the company with the capital needed to continue operations.  We were able to restructure over $6 million in liabilities off of the company’s balance sheet, re-finance the secured debt and preserve ownership’s equity stake in the business.

ES Steel

The Company

ES Steel

This Maryland-based metals distributor and steel fabricator was consistently losing money and was in default on its loans because of the weak economy.

The Challenge

One of the owners was the president of the company and he desperately wanted to retain his management position and secure an opportunity to rebuild the company.  We put together a plan whereby we would test the market for an equity infusion, refinancing, joint venture or a sale in the entirety and demonstrate to the bank which option was best.  When we explained our plan to the bank, they agreed to forgo any further action until they saw the results of our process.

The Process

Equity Partners was retained and ran our marketing and sales process, resulting in 44 parties executing confidentiality agreements and evaluating the company.  We uncovered an equity partner who agreed to infuse cash into the company.

The Solution

By turning over every stone, communicating weekly with the bank so they could follow the process, building trust in the company,  and finding an equity partner, we were able to demonstrate that  restructuring was a viable option. The bank agreed to restructure, the company had access to much needed cash, giving the owners a chance to rebuild the company and strengthening the credit significantly.

Florida Computerized Machining, Inc.

The Company

Florida Computerized Machining, Inc.   

A Tampa, FL area machine and fabrication shop.  This company got caught in the aftermath of the telecom crash and September 11 (its biggest customers were airline-support and telecom companies) and was forced to file Chapter 11.

The Challenge

The owner wanted to stay involved in the company, but the debt-load was much higher than the value of the assets and he didn’t have the cash to reorganize.

The Process

Equity Partners was retained, and looked for buyers for the business while at the same time worked with the FCM shareholder and an investor on a reorganization.

The Solution

Equity Partners helped the shareholder and the investor form a “Newco” and structure an offer with a manageable debt load.  Our marketing process established to the creditors that their offer was the high bid.  Equity Partners also negotiated $2.6 million in concessions from six leasing companies and got a sale approved to the Newco, which allowed the company to exit Chapter 11, and to continue operating in the same location.

Florida Organic Aquaculture

The Company

Florida Organic Aquaculture

Fellsmere, FL based state-of-the-art, technology driven shrimp farming operation.

The Challenge

Unexpected costs associated with the final design and construction of the facility did not allow for sufficient working capital once the project was ready for production. The companies filed chapter 11 bankruptcies to provide time to find an investor or buyer to fund the operation.

The Process

Equity Partners HG undertook an exhaustive marketing effort that lead to numerous groups from all over the world conducting due diligence.

The Solution

An auction of going concern buyers was held, with three bidders, which maximized the recovery for the estate and its creditors. A sale was approved to a company that represented a group of EB-5 investors that participated in the original money raise for the project, allowing them to maintain their visas.

Gaspari Nutrition, Inc.

The Client

Gaspari Nutrition, Inc.

Gaspari Nutrition is a world leading developer and distributor of sports nutrition supplements based in New Jersey.

The Challenge

Sales had dropped from over $80mm to less than $50mm and the value of the business was declining rapidly. The senior lender was exerting pressure on the business which was out of various loan covenants. Key suppliers would not ship product and threatened an involuntary bankruptcy.

The Process

The Company, led by world famous bodybuilder, Rich Gaspari, hired Equity Partners just before they were forced into a liquidation. Equity Partners quickly bought some time with the lender and key suppliers, brought in an outside restructuring officer to run the day to day operations, and pursued a solution. Equity Partners’ comprehensive process resulted in a wide range of potential buyers and investors, including multiple international strategic and financial parties.

The Solution

Equity Partners obtained DIP financing, and an initial offer of $5,000,000. An auction was set up in the bankruptcy court. After more than 50 bids, the business was sold for $10,100,000 to a strategic buyer from Ireland. Rich Gaspari stayed with the company in a management position, with a 30% ownership stake (and the ability to earn more) and the business continued operations.

Gourmet Express, LLC

The Client

Gourmet Express, LLC

A frozen skillet meal manufacturer with production in Gridley, IL, sales offices in San Antonio, TX, and was undergoing a major refurbishing of a facility in Greenville, KY in to which they intended to consolidate operations.

The Challenge

Shareholders were embroiled in state court litigation with each other and their bank note was coming due. No one shareholder wanted to enter personal guarantees to extend the financing without resolution, and the otherwise healthy business was beginning to be paralyzed by the litigation and related rumor mill. The company ultimately filed Chapter 11.

The Process

Equity Partners was retained and immediately worked out a mutually agreeable buy-sell between the partners that would end the litigation, while, at the same time, sought outside buyers and investors.

The Solution

Through a competitive process and negotiations with numerous private equity groups, a deal was selected that paid all creditors 100%, while generating $18 million for the shareholders. That deal then continued to improve, eventually leaving two of three shareholders with substantial equity and some cash, and employment contracts to continue running the business.  The third shareholder took $9 million in cash, a short term consulting contract, and a significant non-compete package.  The business continued to operate, freed from litigation and properly capitalized.