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February 2003


Vol. 1 No. 2
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ABF Journal, February 2003
February 2003

Turnaround Management

Tools of the Trade: Financing Turnarounds
By Martin J. McKinley

By utilizing all of the tools available and applying them within the context of a dedicated credit discipline, the asset-based lender can view turnarounds as opportunities to procure profitable new business, avoid losses and help good companies to succeed. (Ref # IND033)

Retail Turnarounds in Good Times & Bad
By Michael ChartockContrary to conventional wisdom, the level of turnaround activity is not always predicated on the economic climate. Changes in shopping habits, merchandise trends and the consumer’s desire for newer, more efficient formats and pricing models all force retailers to constantly reinvent themselves. (Ref # RETAIL003, TM005)

Even the Best Laid Plans Can Go Awry
By Ruth Ford

Typically, ABL professionals have the enviable distinction of managing their loan portfolios from inception to “grave” with little oversight or interference, but even the best-laid plans of experienced professionals can go awry. The following article gives insight from a turnaround manager’s perspective as to where good deals can turn sour. (Ref # TM006)

Chief Restructuring Officers: The Lender’s Secret Weapon
By Stanley Frieze

Chief Restructuring Officers are turnaround managers: professionals experienced in determining a company’s long-term viability and options. As the number of bankruptcies continues to rise, lenders are helping their borrowers gain managerial expertise in the early stages of crisis by employing the services of such professionals. (Ref # TM008)

The Principles and Practices of the Turnaround Process
By Thomas D. Hays, III, CTP

The turnaround process has become well defined and is supported by a recognized body of knowledge (BOK) developed by the Association of Certified Turnaround Professionals (ACTP).This article discusses the five stages of a turnaround and provides insight into the distinct aspects of each stage. (Ref # TM007)

Lending To A Special Purpose Entity
By Robert H. Newman

Despite the recent controversy surrounding Special Purpose Entities and the accounting practices of a large number of corporate failures, SPEs remain a useful tool to corporations. As a result, asset-based lenders will be provided with opportunities to finance accounts receivable through an SPE, especially given the current credit climate. (Ref # LSP007)

Role of an Investment Banker…Exploring Alternatives
By Glenn Bernabeo

Typically, when a company winds up in a distressed situation, it is under intense pressure from existing creditors and cannot explore its options such as selling assets, restructuring debt or refinancing. This article focuses on the various options available to a company and how investment bankers approach potential transactions in a distressed situation. (Ref # TM002)

Parallel Processing — An Essential Strategy for Distressed Borrowers
By Craig F. Noell

Borrowers in distressed situations may have a number of potential workout alternatives available, each of which can provide a winning outcome for all the parties. In the following article, Craig Noell discusses how pursuing multiple options simultaneously is essential to maximizing value. (Ref # IND032, CRD004)

CIT Panel: Experts Speak Out on Succeeding in Tough Times

One of the nation’s leading providers of financing and factoring, CIT, recently sponsored a panel of apparel and retail leaders. The panel addressed current economic and industry conditions and explained what they are doing to stay — and succeed — in the business. (Ref # FAC012)
Columns

A PROFILE OF SUCCESS
Still Seeking Out Sunny Deals
A Profile of Walter Einhorn, President & CEO of Sunrock Capital Corporation

Walter Einhorn, a veritable legend in the asset-based lending industry, still revels in the thrill of the hunt for ABL deals, negotiations with bank regulators, turning around businesses and the fulfillment in having presided over three major asset-based lending organizations. (Ref # EXEC003)

PUTTING IT TOGETHER: ANATOMY OF ABL TRANSACTIONS
Daisytek & Bank of America: Successful Syndication Fuels Growth
By Rosemary Davis

In late 2001 Daisytek began looking for a new credit facility that would allow it to respond to market challenges, to finance future acquisitions, and to meet its critical working capital and capital expenditure needs. Daisytek selected Bank of America Business Credit to provide a new facility which offered several benefits over a traditional cash flow facility. (Ref # DLS003)

FACTORING FOCUS
Strengthening ABL Relationships & Driving Business Growth
By Jay DesMarteau

Long misunderstood in the realms of banking and asset-based lending, components of factoring are being used today to breathe life into deals that once appeared lost. Used in tandem, the core components of factoring can act as complementary products to traditional ABL products — a marriage that delivers advantages to asset-based lenders. (Ref # IND034)

LEGAL EYES
Structuring Insider Working Capital Advances
By Lawrence F. Flick, II

Occasionally during the course of a workout, an asset-based lender may find that the principal of its borrower or some other interested party may be willing to provide additional cash liquidity to the borrower. While few lenders would refuse such an offer, they may find themselves in extensive negotiations. (Ref # LGL009)

TURNAROUND CORNER
Increasing the Odds for Full Recovery
By Michael E. France

Strategic use of an outside restructuring professional can increase the odds for an ABL realizing full recovery. The outside professional can facilitate recovery alternatives as opposed to “last resort” recovery through liquidation.

(Ref # TM009)

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