Fort Dearborn Advises Kanaflex Corporation, USA

Kanaflex Corporation USA (“Kanaflex” or the “Company”) is an industrial hose manufacturer with operations in Vernon Hills (IL), Compton (CA), and Houston (TX). Kanaflex is the wholly-owned U.S. subsidiary of Kanaflex Corporation Co., Ltd. (the “Parent”), the Japan-based parent company.

During the 4th quarter of 2019, the Parent required a transfer of excess funds from Kanaflex, resulting in tight liquidity and concerns from the Company’s lender. An additional funds transfer in the 1st quarter of 2020 resulted in significant past due vendor payables and defaults on facility lease payments. The facilities’ landlords drew on letters of credit resulting in a loan default with the Company’s lender. The lender required the Company to engage a consultant to approve cash disbursements and develop a plan that would allow the Company’s lender to exit the credit. Fort Dearborn Partners, Inc. (“FDP”) was engaged by the Company for this purpose.

FDP reviewed historical cash flows, vendors’ cash requirements, and customer collection expectations, and prepared a 13-week cash flow forecast. Through this assessment, FDP implemented measures that stabilized cash flows and developed a plan to replace rent escrows and reduce vendor past due payables. 

Following completion of this phase of the engagement, FDP embarked on the refinancing effort by preparing a Confidential Information Memorandum. Utilizing our deep understanding of the lending environment and extensive lender relationships, we obtained 5 competitive term sheets from finance companies. Working with the Company and the selected lender, FDP developed a loan structure that facilitated the selection of mBank Business Credit as the Company’s new lender. FDP assisted with the due diligence process which resulted in a successful transition of the Company’s lending relationship.