More Case Studies

March 30, 2011

$9 Million Cash Flow Justified Term Loan Ends Litigation

The London Manhattan Company recently found a $9 Million Cash Flow Term Loan Financing for one of our clients in the food service industry. The client had no fixed assets.

The Situation:

The working relationship between our client and its former lender had deteriorated, leading to litigation. Settlement discussions had ground to a halt. The parties asked LMC to broker a settlement deal between them, and then arrange the financing to implement it.

LMC negotiated the financial terms of the litigation settlement between the parties, and arranged new cash flow financing to fund it. The new loan provided proceeds to: (a) refinance the borrower’s existing debt, (b) fund the repurchase of the stock and warrants held by its prior lender, and (c) provide additional working capital to the company.

The Financing:

This Cash Flow Justified Term Loan financing had the following attributes:

Amount Financed: $9 Million
Structure for Financing: Variable Rate Term Loan
Index: 30 Day LIBOR Plus Margin
Amortization: Stipulated Monthly Payments With Balloon At Maturity
Loan Term: Seventy Two Months
Collateral: Cash Flow Plus Blanket Lien On All Intangibles And Personal Property Subject Only to Liens Permitted By New Lender
Use of Proceeds: Retire Existing Debt, Repurchase Common Stock, Preferred Stock and Warrants From Prior Lender, and Working Capital
Other Closing Conditions: Execution of Settlement Agreement Between the Borrower and the Prior Lender

$5.425 Million Refinance Increases Availability, Decreases Debt Service

The London Manhattan Company found a $5.425 million refinancing package for a contract transportation company with headquarters in the Western US. The refinancing increased availability and decreased debt service for this growing company. The new structure refinanced company real estate, equipment and accounts receivable, and paid off multiple lenders.

The Situation:

This contract transportation company client had total annual revenues running just under $16 Million. The company has been very successful, and is currently seeking add-on acquisitions of targets with compatible lines of business. This new, more efficient capital structure will facilitate those future acquisitions.

The Combined Financing:

LMC found refinancing for the following asset classes:

Revolving Line of Credit: $1.3 Million
Equipment: $3.75 Million
Real Estate: $375 Thousand

$5 Million Real Estate Sale Leaseback Increases Working Capital For Rural Manufacturer

The London Manhattan Company recently found a $5 million sale leaseback (SLB) financing for a manufacturer located in the Eastern US. The borrower’s plant was located in a rural area, which made new real estate financing difficult.

This sale leaseback financing is a good example of the many SLB financings found by the London Manhattan Company for its clients recently. These SLB financings typically provide more availability than conventional real estate debt financings, because conventional real estate lenders normally utilize lower loan to value (LTV) limitations.

LMC has been extremely effective in finding new financing for its clients in such situations. Please call if you need more working capital, or have a special situation or opportunity to discuss. We have many niche, specialty and bridge programs available.

The Situation:

This manufacturing borrower had a long history of successful operations with annual revenues running just under $20 million. The company had been through a period of industry turbulence which made for a difficult operating environment.

The Sale Leaseback Financing:

LMC found new real estate SLB Financing with the following attributes:

Sale Leaseback Amount of Proceeds: $5 Million
Property: Borrower’s Manufacturing Plant Containing 200,000 Square Feet of Building on a Large, Multi-Acre Parcel
Lease Term: Twenty Years with Two Five Year Renewal Options
Lease Type: Triple Net
Base Rent: Subject to Two Percent Annual Increases
Repurchase Option: Borrower May Elect To Repurchase The Property By Notice Given Within Two Years of the SLB Closing

$2.6 Million Equipment Bridge Loan Provides Working Capital For Manufacturer Without Debt Service Coverage

The London Manhattan Company recently found equipment financing for a manufacturer located in the Eastern US based solely on the financed equipment’s collateral value. The borrower could not provide coverage due to operating difficulties.

The Situation:

This manufacturing borrower had a long history of successful operations with annual revenues running just under $20 million. The company suffered badly from competitive pressures, and was forced to close some of its manufacturing locations and consolidate operations.

The company experienced significant operating losses and deterioration of net worth. The company had an immediate need for capital and additional liquidity, but could not provide debt service coverage to attract new financing.

The Equipment Financing:

LMC found new Equipment Financing with the following attributes:

Loan Amount: $2.6 Million
Equipment Financed: Manufacturing Equipment Located in Borrower’s Plant
Loan Term: One Year
Loan To Value: Percentage of Liquidation Value of Equipment Financed
Collateral: 1st Position Lien on Equipment Financed
Payments: Monthly Principal and Interest Payments
Prepayment Penalty: Yes; Six Months Minimum Interest Obligation
Personal Guarantees: None
Debt Service Coverage: Not Required

$12.5 Million Bridge Loan Settles Protracted Litigation With Lender

The London Manhattan Company found a $12.5 Million Bridge Loan for an equipment rental firm located in the Eastern US. This bridge financing included an equipment facility of $9.5 million and an accounts receivable facility of $3 million, and enabled the client to pay off its existing lenders. The client and the primary secured lender had been in protracted litigation, and hearings and motions continued unabated right up to the closing date for the new bridge loan.

The Situation:

This client was a 20 year-old earth moving equipment dealership and rental company, providing heavy industrial assets to the construction, scrap and demolition industries. It had a long history of successful operations with annual revenues running over $40 million. The client had previously engaged two other investment banking firms before LMC without result, and had paid substantial fees to them. The client then engaged LMC without payment of advance fees, which is our practice. LMC will also arrange permanent financing to take out the bridge at the end of its one year term.

The Bridge Loan Structure:

LMC found new bridge financing with the following attributes:

Total Bridge Loan Facility: $12.5 Million
Equipment Bridge Facility: $9.5 Million
Accounts Receivable Based Bridge Facility: $3 Million
Equipment Collateral: Client Equipment in Various Locations
A/R Collateral: Accounts Receivable Deemed Eligible by the Lender and Certain Inventory
Loan Term: One Year
Equipment Loan To Value: Percentage of Liquidation Value of Equipment Financed
Security Interests: 1st Position Lien on Collateral Financed
Monthly Payments: Principal and Interest Payments on Equipment Facility; Interest Only on A/R Facility
Prepayment Penalty: Yes; Three Months Minimum Interest Obligation on Equipment Facility
Personal Guarantees: Yes
Debt Service Coverage: Not Required

Case Study For Public Oil and Gas Services Company

LMC’s suggestions as described in financial options report:

Lower interest costs
raise collateral advance rates


$22 million publicly-traded oil & gas services company
$3.3 million ebitda and $7 million equity
$6 million previous year loss and losses prior two years


Replace $5 million revolver at lower interest rate
increase revolver advance rate to provide $0.75 million additional availability
refinance $4.5 million existing term debt at lower interest rate
reduce annual debt service by $1.85 million
set up new $4.2 million capital lease facility

Case Study For Privately Held Medical Products Company

LMC’s suggestions as described in financial options report:

Pull the company out of liquidation and save 375 jobs
secure new revolver
secure new equipment and real estate term debt
arrange debt forgiveness


$12 million medical products company in chapter 11
$10 million bank lender about to force liquidation
$1 million in unsecured creditor payables
net worth at negative $3.5 million


$3 million revolving credit line secured by receivables
$0.35 million equipment loan
$1.75 million real estate loan, 95% guaranteed by federal & state agencies
sell off guaranteed loan at immediate $0.17 million profit to funding bank
commercial bank lender forgives $6 million

$4.5M Financing For Car Dealer Pays Off Existing Lender At A Substantial Discount

New Tombstone Financing Details:
Borrower: Car Dealership
Amount Financed: Approximately $4.5 Million
Discounted Payoff Of Existing Lender: Yes
Stock Pledge: Required
Collateral: First Lien On All Corporate Assets
Term: Thirty Six Months
Personal Guarantees: Not Required
Financial Reporting Required: Monthly

The Details:

The London Manhattan Company is pleased to announce it recently found a $4.5 million “one-stop” facility for an automobile dealership. This financing paid off the existing lender at a substantial discount. The deal was structured as a senior secured term loan, and was secured by all corporate assets.

The Situation:

The borrower was a very successful car dealership with current annual sales running at just over $40 million. Historical annual revenues prior to the financial meltdown exceeded $60 million. The dealership’s existing lender had invited the borrower to secure new financing.

The auto dealer took this opportunity to negotiate a substantially discounted payoff of the existing lender’s note. However, new financing was needed to pull the trigger. LMC arranged the new loan, which greatly strengthened the borrower’s post closing balance sheet.