EUR 2m senior loan to a family owned SME
Background:
A family company owned for generations, producing furnishing and fittings for the retail industry. Located in the outskirts of Denmark with 80 employees
Turnover in 2016 EUR 11.5m, EBITDA of EUR 1.7m
Borrower severely hit by the financial crisis and was loss-making for several years
Very limited alternative use of property if the company would go bankrupt due to the remote location in the western part of Denmark
The situation at on-boarding in 2016:
Collateral in production/office building and machinery
High loan-to-value (LTV) of 200%
Leasing and several other loans from various lenders made it hard to refinance
A bank agreement had been entered into in June 2013 between the banks and the largest leasing provider regulated the cash flow waterfall, including joint amortization profiles, interest levels and more, until certain milestones had been met
CEO was invited to inject money (EUR 150k) in return for a part of the upside
The situation we were faced with:
CAPEX backlogs and too high LTV, but fundamentally a good business with solid customers
Borrower managed to win a large order by an important customer – which required working capital
Liquidity under pressure
Where Reviva added value:
Created a workout strategy and put pressure on the company to focus operations on profitable customers
Assisted borrower to get working capital financing from the Danish Growth Fund
Ensured stability in the turn-around process
Had an active dialogue with the company’s management and with their auditor to ensure that the turnaround of the business was viable and on track
Outcome:
The business has undergone a nice turn-around and is growing in terms of revenue and employees
Company was able to refinance the senior loan through a mortgage institution together with a new loan from a Danish Growth Fund