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Chemical Processor secures $20 million financing

Company Profile

Chemical company with $100 million in sales seeking new asset-based financing.

Problem

Action

The company invited Interlochen for a site visit in order to assess and outline the financing process in detail (Phase I - Discovery).  The Interlochen CFO spent two days with owners and management of the firm. He was then hired to help prepare and present a financing plan to several banks (Phase II - Financing) which included: 

1) Review of the operating results and statements prepared by the local CPA and internal accounting staff.  Numerous changes to the current and past financial statements were implemented at our recommendation.

2) Preparation and presentation of a financing package for three regional banks that expressed an interest in the company.  The package contained a new budget for the current year based on our meetings and discussions with management.

3) Selection of the better offer from two of the banks and final negotiation of terms to insure a successful closing.

Based on our success with the financing and the continued need for a strategic financial executive in-house, we entered the final phase (Phase III – Transition) and served as interim CFO for six months.  This provided the comfort required by the new lender and allowed us to focus on further professionalizing the organization. This included:
 
1) Over 30 years of related work experience, the Interlochen CFO was equally well-suited to serve as a mentor, trusted advisor, and sounding board to the newly promoted CEO who was assuming the role from his father.  The CEO was able to quickly transition into the role and avoided costly mistakes.

2) Interlochen's recommendation to hire a new CPA firm.  The company had clearly outgrown the capabilities of their local CPA.  After reviewing several competitive bids, a new CPA firm was selected and the audit was completed in due course.  The Interlochen CFO ensured this process was conducted smoothly and efficiently, with minimal disruption to the business.

3) Review of incentive, insurance, and benefits plans, IT structure, and monthly financial reporting, including reporting for the new banking relationship.  Summary financial statement formats were suggested and prepared for internal use by management and separate summary statements for outside users such as the banks. 

4) Meetings with internal and external counsel on various tax and planning matters involving the family and its various businesses.  A financial projection model was prepared to be used by management for running various scenarios concerning possible future changes to the company's business.

Results

The company's local bank remained as the source of term debt to the company while the winning regional bank provided $20 million of working capital under an asset based line.  The CFO led discussions and negotiations with the competing banks and suggested changes to the local bank to expand the amortization on existing debt and add new term debt. This improved the company's annual cash flow by over $1,000,000. 
 
A comprehensive review of the company's tax structure was completed by the new CPA firm, which resulted in numerous recommendations and tax savings.  Over $200,000 of tax credits were found immediately and used in the preparation of the Company's current year and prior year tax returns.

The Interlochen Group’s engagement lasted less than nine months and the CFO worked on an “as-needed” (versus “full-time”) basis.  The CFO continues to be involved on a project basis, as requested by the company's CEO.  The current project involves preparing the business plan for a new $7,000,000 terminal facility at a southeastern port.