The Company is an industrial hose manufacturer with operations throughout the United States.
Additionally, the Company provides an innovative pipe product that is replacing traditional concrete sewer lines for a variety of private and public works projects.
The Company is a wholly-owned subsidiary of a Japan-based parent company.
During the 4th quarter of 2019, the Parent required the transfer of excess funds from the Company, resulting in tight liquidity. An additional funds transfer in Q1 2020 resulted in significant past-due vendor payables and payment defaults on facility leases, causing a loan default with the Company's Lender.
The Company retained Fort Dearborn to review cash flows and develop a plan that would allow the Lender to exit the credit.
FDP reviewed historical cash flows, vendors' cash requirements, and customer collection expectations and prepared a 13-week cash flow forecast. In addition, FDP prepared a monthly financial forecast and prepared the client for the process of refinancing its loan with another lender.
FDP implemented measures during this assessment that stabilized cash flows, reduced vendor past-due payables, and developed a plan to replace rent escrows.
Upon completion of the assessment phase, FDP began the refinancing effort by preparing a Confidential Information Memorandum and, by using our deep understanding of the lending environment and extensive lender relationships, obtained five competitive term sheets from finance companies.
Working with the Company FDP developed a loan structure that facilitated the selection of the Company's new Lender.
FDP was able to reduce past due vendor payables and past due facility lease payments. Additionally, FDP stabilized cash flows, allowing the Company to reinstate its rent deposits for each of the leased facilities.
During the refinance phase of the engagement, FDP assisted with the due diligence process and was able to facilitate the Company's successful transition to its new Lender.