Corporate Finance Client (NGS)

NGS, the client, originally approached TMP for funding to acquire a target business (PCB) that provided a specialist binding service.
The client required £500,000, in part to finance the deal and in part to re-finance existing borrowing and to boost its working capital.

Considerations

A major consideration was whether the business was fundable in its current position. It was already highly geared and its current invoice discounter (“ID”) was looking to reduce the facility or exit from the business entirely.

The challenge for TMP was to find a solution which:

• enabled the business to take advantage of the opportunity to add a specialist binding company to complement its own services

• whilst restructuring the existing business to enable it to continue to trade and be profitable going forward.

Issues

There were a number of stakeholders, all of whom had very different agendas and the challenge was to meet all of their needs whilst maximising creditors’ interests. We had to work together with 4 separate lawyers and 15 separate professionals to pull a deal together within a matter of weeks.

It was important to keep all parties informed of the progress and issues and to ensure that all parties worked together to ensure the final deal could be achieved.

Valuations of the business and assets had to be obtained quickly – we used specialist agents to do this.

It was imperative to ensure that a robust, but short, marketing of the business was undertaken to test the market.

The existing ID provider had to be replaced at short notice. This was done by a specialist lender who quickly assessed the position, performed due diligence and placed a £1.2million facility. This was done in less than 3 weeks from first contact.

Fixed assets were refinanced by the existing asset based lender, who was happy to support the merged business going forward.

Additional working capital was required so a part equity deal was brokered to enable funds to be made available by a specialist lender.
The existing directors and shareholder in PBC wished to retire – their exit from the business and corresponding package was imperative to the deal.

Outcome

A restructuring deal was put together such that the target company became the acquiring company. The mechanism was that the business and assets of NGS were purchased by PBC in a reverse takeover, pre-liquidation sale.

The new ID facility replaced the old facilities in both businesses and the ID provider now provides a facility for the combined business.
The asset based lender refinanced the assets in the target business, allowing vital cash to be released to effect the deal.

The shell company of NGS was recently liquidated.

The businesses were successfully combined and now operate from the original target company’s site under one roof.

All 54 employees of NGS retained their jobs and are currently working for the combined business PBC. This enabled a significant unemployment saving of over £500,000.

The deal used insolvency expertise to maximise creditors’ interests and meet all the stakeholders’ requirements.

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