The Capital Solutions Group Completes Recapitalization of Sponsor Portfolio Company
The Capital Solutions Group (“Capital Solutions”) was engaged by a prominent middle market private equity firm to assist in the recapitalization of its meeting-planning portfolio company. The company has been challenged by reduced trade show spending and attendance due to the current economic environment. Management and the sponsor were focused on operational improvements and right-sizing the business, in addition to exploring strategic alternatives. Capital Solutions was retained to assist in the development and implementation of a $70 million recapitalization plan.
The sponsor’s long term working relationships and willingness to make an incremental investment catalyzed a transaction which included: (i) a new 3 year revolving credit and term loan facility, (ii) major payment modifications and a maturity extension of its mezzanine debt, and (iii) a debt-for-equity conversion of a portion of its debt including 100% of its seller notes. Ultimately, the company was able to reduce its debt by over 35% while the sponsor retained majority control of its portfolio company. The transaction closed in December 2009.
Tim Shoyer led the transaction for Capital Solutions. “Some very sophisticated debt and equity professionals in this transaction concluded that a “kick-the-can down the road” strategy would not maximize enterprise value over the long term, and the company and its stakeholders needed to recapitalize the company’s balance sheet to reflect its current operating performance. I believe we will see this approach taken more frequently in 2010,” Shoyer said.
About The Capital Solutions Group: We provide financial advisory services to companies, private equity groups, and lenders in the middle market. Our mission is to provide independent balance sheet advice and execution for clients in financing, restructuring, and M&A transactions. For a detailed overview of our firm and services, see our website at: www.TheCapitalSolutions.com.
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