Daily News: June 8, 2017

Rosenthal Provides Financing to Expedite Prestige Restructuring

Rosenthal & Rosenthal provided financing to facilitate a complex restructuring and sale of Prestige Industries, a provider of commercial laundry and valet services to the hospitality industry in the New York City region.

An affiliate of the private equity firm Sunrise Capital Partners completed the acquisition of Prestige Industries’ operations through a Chapter 11 auction process approved on May 12, 2017. Both a financial and strategic investor in the business, Sunrise’s team of investment professionals is helping to lead the turnaround efforts.

As a result of staffing constraints, employee turnover, a highly leveraged capital structure and operational losses around their facilities construction, Prestige had been experiencing cash-flow stress that negatively affected the company’s liquidity. Earlier this year, turnaround consultants at Traxi were brought in to work with Prestige to stabilize its financing and operations, which ultimately resulted in a strategic Chapter 11 bankruptcy filing.

As part of the restructuring, Rosenthal worked with Traxi and a team of lawyers from Otterbourg to develop an innovative financing arrangement by leveraging the company’s machinery and equipment and other fixed assets as collateral to address cash flow issues and help stabilize the business. This financing opportunity allowed the company to pursue either a 363 sale in bankruptcy or a capital restructuring. The arrangement provided Prestige with the funding it needed to relieve its cash flow constraints and the flexibility to pursue alternative reorganization solutions.

Rosenthal’s strategic approach allowed Prestige to refinance its pre-bankruptcy working capital lender, over the opposition of a junior secured lender, which positioned the company to maximize its Chapter 11 sale and restructuring prospects. Moreover, when the sale was completed, Rosenthal was able to pay off the initial asset based DIP loan with its new loan to Sunrise. Prestige’s business has now successfully emerged from bankruptcy through the sale to an affiliate of Sunrise Capital Partners.

“This was a complicated deal that showcased Rosenthal’s nimbleness and our ability to think strategically to structure a deal that was clearly in the best long-term interests of both of our clients,” said Rob Miller, EVP and head of Asset Based Lending at Rosenthal. “We’re thrilled that we were able to help maximize the value of Prestige’s business to effectively transition the operations out of bankruptcy and back to a going concern business that is well positioned to succeed.”