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Representative Experience > Restructuring

ENERGY FUTURE HOLDINGS CORP.

Restructuring

Company Description:

  • Energy Future Holdings Corp. (the parent of TXU Energy, Luminant Generation, and Oncor Electric) is a $6.2 billion revenue / $33 billion asset power generation and downstream delivery company.

Challenges Faced:

  • Energy Future Holdings at the time of its Chapter 11 filing was capitalized with in excess of $40 billion of debt and $8.0 billion of equity.

Solutions Provided by SOLIC Professionals:

  • Served as financial advisor, pursuant to the authority delegated to and under the direction of the Chairman of the Board and its disinterested directors.
  • Was retained based upon SOLIC’s recognized expertise and extensive experience and knowledge in providing restructuring and financial advice in connection with distressed companies.
  • Services included, among other things, review of Energy Future Holdings’ contemplated plans of reorganization, intercompany claims, financial elements of tax related issues, financing proposals and future financing needs, and other such restructuring matters as required and agreed upon.

Result Highlights:

  • Provided Disinterested Directors with independent analysis pertaining to various key elements in support of the Company’s targeted emergence from bankruptcy.

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TAYLOR BEAN & WHITAKER MORTGAGE CORPORATION

Restructuring, Investment Banking, Asset Management

Company Description:

  • Taylor Bean & Whitaker Mortgage Corporation (‘TBW”) was the nation’s largest independent residential mortgage originator, headquartered in Ocala, Florida. The Company serviced $80 billion of mortgage loans and originated approximately $40 billion annually of mortgage loans.

Challenges Faced:

  • TBW was terminated as an approved servicer by Freddie Mac and Ginnie Mae and over $2 billion of TBW’s funds were frozen at Colonial Bank in connection with its seizure by the FDIC. TBW also owned various insurance companies, title companies, commercial real estate holdings, as well as Platinum Community Bank that was seized by the FDIC.

Solutions Provided by SOLIC Professionals:

  • Served as Chief Restructuring Officer and provided support personnel in connection with the Company’s Chapter 11 bankruptcy filing.
  • Coordinated and directed the administration of the Company’s Chapter 11 case, including assistance with respect to the preparation of bankruptcy schedules, statements of financial affairs and plan of reorganization or liquidation relating to the Company.

Result Highlights:

  • Oversaw the orderly disposition of approximately 4,500 foreclosed homes.
  • Post-bankruptcy, continue to serve as Liquidating Trustee and Chief Financial Officer.
  • Pursued significant litigation recoveries in order to maximize return to stakeholders including filing two of the largest accounting malpractice claims in history, as well as hundreds of avoidance actions.
  • Managed the wind-down, sale and transfer of $10 billion plus of mortgage loans.
  • Negotiated the resolution of significant governmental investigations and litigation matters.

GMAC RESCAP

Restructuring

Company Description:

  • GMAC ResCap was the second largest independent residential mortgage lender in the U.S., originating first and second lien residential mortgage loans through a nationwide network of retail offices, direct lending centers and internet sites.

Challenges Faced:

  • Negative impact caused by the downturn in the subprime and home building market.

Solutions Provided by SOLIC Professionals:

  • At the request of Cerberus (51% owner of GMAC), SOLIC professionals were tasked with oversight of ResCap’s warehouse lending and home builder portfolio.
  • Worked with management to create and execute a detailed risk mitigation plan and managed total aggregate exposure in excess of $15 billion including the orderly liquidation of the largest mortgage warehouse lending portfolio in the U.S.
    • Created a 70 person special assets team;
    • Developed collateral monitoring and exposure management systems;
    • Assisted with respect to the loan sale execution process responsible for disposition of over $3 billion of mortgages; and,
    • Negotiated and implemented bankruptcy strategies associated with maximization of value of distressed debt in connection with the largest subprime origination and homebuilder bankruptcies.

Result Highlights:

  • SOLIC professionals led the restructuring of more than $8 billion of loans that GMAC ResCap made to large national homebuilders, including on and off balance sheet financing arrangements.
  • Oversaw the loan sale execution process responsible for disposition of over $3 billion of mortgages.
  • Negotiated the restructuring and disposition of over 3,000 model homes, 10,000 lot options and thousands of acres of raw land.
  • The end result was a material reduction in ResCap’s losses (estimated to be in excess of $500 million in savings) and avoidance of its ongoing exposure to the historic volatility being experienced in the residential mortgage market during that time period through timely and orderly creative dispositions.

TENDER LOVING HEALTH CARE SERVICES, INC.

Restructuring, Investment Banking

Company Description:

  • Tender Loving Health Care Services, Inc. (“TLC”) was the largest privately held independent provider of home nursing and hospice services in the U.S. with 92 home health and 11 hospice agencies located in 22 states and the District of Columbia.

Challenges Faced:

  • Two months after TLC refinanced its existing credit facilities in connection with the acquisition of AccuMed and NorthWestern Memorial Home Health Care, TLC experienced (i) poor post acquisition integration, (ii) significant decline in revenues and breach of loan covenants, (iii) lack of urgency and accountability at all levels of management, (iv) bloated field care-giver cost structure, and (v) multiple underperforming and negative contribution margin branches.

Solutions Provided by SOLIC Professionals:

  • A SOLIC professional was appointed Executive Chairman in order to oversight the capital and operational restructuring.
  • Engaged as exclusive financial advisor to develop and implement value maximization strategies including a sale of the Company or its assets.
  • SOLIC professionals developed and implemented a performance improvement improving EBITDA by over $15 million annually and then orchestrated the sale of the company at significant premium to market multiples.

Result Highlights:

  • By leveraging the potential of a competitive auction process, SOLIC professionals were able to induce a premium pre-emptive bid from Amedisys (NASDAQ:AMED) for a cash price of $395 million. The transaction represented a premium valuation multiple in excess of 11.0x EBITDA.

EAGLE HOSPITAL PHYSICIANS, LLC

Restructuring, Investment Banking

Company Description:

  • Eagle Hospital Physicians, LLC (“Eagle” or the “Company”), was a leading hospitalist management company focused on developing and managing hospitalist practices for its hospital partners. The Company provided inpatient management solutions through three sources consisting of on-site hospitalist medical practices, telemedicine, and temporary hospitalist staffing through a locum tenens division. Eagle had a national presence and long-standing customer relationships with over 430 affiliated clinicians, client contracts in 17 states at 33 leading regional hospitals and over 550,000 hospital medicine annual encounters.

Challenges Faced:

  • The Company embarked on a roll-up strategy directed by its private equity owner that did not prove successful primarily due to timing, management turnover, and integration issues.
  • Compounding the situation, the owner operators who drove physician relationships (and the top senior executives of each of the three main practices acquired by the private equity group) departed shortly after the combination.
  • Additionally, the combined organizations undertook minimal post-acquisition integration with respect to clinical leadership support models, physician culture, standardized contracting and financial systems.

Solutions Provided by SOLIC Professionals:

  • Retained as financial and restructuring advisor, serving as Executive Chairman, COO and CFO to affect a realignment of organizational strategy including refocusing on client relationships to stabilize and modify contracts to grow contribution margin, implementing critical improvements in revenue cycle management and standardizing recruiting and compliance programs.
  • Developed and implemented comprehensive operational and capital structuring rehabilitation plans to integrate, right size, stabilize, and recapitalize the Company which successfully culminated in the consummation of a debt for equity capital restructuring that resulted in the senior lenders owning a majority of the Company. This resulted in mitigating legacy liabilities and positioning the Company for future growth under new leadership.
  • Subsequent to completing the operational restructuring initiatives, SOLIC was retained to pursue a sale or recapitalization of the Company.

Result Highlights:

  • Successfully repositioned Company for profitable growth by restructuring and standardizing all client contracts, eliminating a layer of middle management to create greater client accountability, renegotiating key payor contracts and enhanced physician recruiting.
  • Recruited new leadership to accelerate growth of telemedicine division.
  • After SOLIC orchestrated a successful competitive solicitation process, Eagle’s Hospitalist Division was acquired by Sound Hospital Physicians, one of the largest providers of hospitalist care.

TENSAR LEASE FUNDING CORP.

Restructuring

Company Description:

  • Tensar Lease Funding Corp. is a special purpose finance vehicle consolidated by Tensar Corporation, a U.S.-based multinational holding Company whose subsidiaries develop and manufacture an integrated suite of construction-related products and services that provide soil stabilization, earth retention, foundation support and erosion and sediment control for infrastructure end-markets.

Challenges Faced:

  • Despite profitable operations, due to the combination of shifting market demand for construction services and the overhang of loan commitments from a prior capital restructuring, Tensar was unsuccessful at addressing imminent debt maturities through refinancing in either the high yield bond market or via a traditional bank debt. As a result, Tensar defaulted under its legacy loan obligations.

Solutions Provided by SOLIC Professionals:

  • Engaged to provide financial advisory services to optimize the Company’s cost of capital, including an assessment of current projection model and business plan, and analysis of capital restructuring alternatives.
  • Key activities included:
    • Evaluating and analyzing the cost of each layer of capital, and advantages and disadvantages under each capital restructuring alternative, including valuation analysis, debt capacity analysis and capital structure modifications.
    • Coordinating with outside legal counsel to prepare contingency plans for a possible in-court scenario, which was ultimately avoided.
    • Successfully negotiating a multi-party forbearance agreement, determining strategic restructuring alternatives, and advanced discussions to achieve a consensual out-of-court restructuring.

Result Highlights:

  • Completed a capital restructuring of $280 million of senior debt and $100 million of subordinated debt.

JIFFY LUBE INTERNATIONAL / HEARTLAND AUTOMOTIVE SERVICES

Restructuring, Investment Banking

Company Description:

  • Heartland Automotive Services, Inc. (the “Company”), the largest franchisee of Jiffy Lube service centers, operated approximately 440 quick-oil-change stores in major markets.

Challenges Faced:

  • The Company experienced declining profitability resulting from increasing competition, changing automotive service requirements, and negative press related sales of unnecessary services.
  • The declining profitability and operating trends forced the Company to seek bankruptcy protection.

Solutions Provided by SOLIC Professionals:

  • Served as financial advisor to the unsecured creditors’ committee led by Blackstone as the Company’s largest mezzanine lender.

Result Highlights:

  • SOLIC professional facilitated the following restructuring initiatives:
    • Responsible for negotiation of a significant up-front funding from the Company’s franchisor and primary oil company allowing for a $40,000 “re-imaging” of each of the 440 Heartland Jiffy Lube outlets.
    • Negotiated the Company’s new oil contract, the single largest cost component in the Company.
    • Negotiated the Company’s franchise agreements with Jiffy Lube leading to significant improvements in operating performance.
    • Negotiated the Company’s senior lender credit facilities.
    • Identified and elected a new management team.
    • Orchestrated the final plan of reorganization thru which the largest unsecured creditor (Blackstone) became the Company’s largest equity holder
  • The Company subsequently emerged from Chapter 11, executed a performance improvement plan and ultimate successful sale to Sun Capital.

SUMNER REGIONAL MEDICAL CENTER

Restructuring, Investment Banking

Company Description:

  • Sumner Regional Health Systems, Inc. (“SRHS”) operated as a not-for-profit healthcare system serving an eleven county region in north-central Tennessee through its four community-based acute care hospitals. SRHS had amassed the #4 market share position throughout the greater Nashville area.

Challenges Faced:

  • SRHS suffered from excessive capital spending and management overhead and had amassed over $140 million in debt.
  • SRHS faced declining patient revenues and mounting operating losses resulting in an inability to meet future debt obligations.

Solutions Provided by SOLIC Professionals:

  • The SRHS Board of Directors engaged SOLIC professionals to provide (i) interim management, (ii) restructuring advisory services, and (iii) serve as financial advisor with respect to exploring strategic alternatives.
  • SOLIC professionals led SRHS through a Chapter 11 filing to effectuate the restructuring plan and ultimate sale.
  • Specific advisory services provided by SOLIC professionals included: (i) serving as Chief Restructuring Officer with oversight of the CEO and other personnel; (ii) an initial review of restructuring alternatives; (iii) operational restructuring focused on performance improvements; (iv) capital restructuring services including financial reporting, negotiation with debt holders; and, (v) orchestrating a competitive sale process.

Result Highlights:

  • Successful restructuring initiatives included:
    • Negotiated with bondholders to waive default interest and agree to interest deferral on SRHS’ outstanding bond debt from the filing date until sale closing at which time the interest was paid from the sales proceeds.
    • Implemented financial improvement initiatives which resulted in annual pro forma EBIDA improvement of approximately $14.5 million. Key focus areas included clinical resource management, supply chain, labor productivity, clinical documentation and coding integrity, revenue cycle, managed care, and certain other divestitures.
    • Streamlined system-wide governance and organizational design in order to respond timely and effectively to financial, operational and market demands, while also implementing efficient and coordinated communication strategies for informing physicians, employees and the broader community to maintain organizational stability.
    • Disposed non-core assets by assessing the liquidity opportunity for selling specific non-core assets and developing a disposition plan.
  • Structured, negotiated and implemented a successful §363 sale transaction to LifePoint Hospitals, Inc. for $156 million
  • A SOLIC professional served as the wind-down fiduciary for the bankruptcy estate post sale.

WESTCHESTER MEDICAL CENTER

Restructuring

Company Description:

  • Westchester Medical Center (“WMC”) is a health care network consisting of a tertiary care facility, a nursing home, and 60 outpatient clinics.

Challenges Faced:

  • WMC was challenged by an inefficient organizational structure, challenging union contracts and declining profitability which resulted in an inability to meet its debt obligations.

Solutions Provided by SOLIC Professionals:

  • Served as financial and restructuring advisor to the Board of Directors.
  • Key advisory services included:
    • Development of a capital and operating restructuring plan.
    • Implementation of cash flow controls and forecasting, including 13 week cash flow forecast and ongoing contribution modeling.

Result Highlights:

  • Successfully completed a capital restructuring that included:
    • A general reduction in force, and the outsourcing of various service offerings.
    • Negotiated extensions to WMC’s $100 million commercial paper program.
    • Obtained a $30 million capital infusion.
    • Sold an outpatient imaging center.
    • Spun-off WMC’s behavior healthcare subsidiary.
    • Renegotiated an affiliation agreement with a local medical college.

BLI HOLDINGS CORP. / BOCCHI LABORATORIES

Restructuring

Company Description:

  • BLI Holdings Corp. was a contract manufacturer for the personal care industry with divisions in Santa Clarita, California and Dayton, New Jersey. Its two divisions – Bocchi Laboratories and Medicia Corp. – manufactured Paul Mitchell hair products, Victoria Secret body lotions, and other high profile personal care products.

Challenges Faced:

  • The company was in monetary default of its senior credit facility due to the loss of significant customers, poor senior management and an excessive debt level.

Solutions Provided by SOLIC Professionals:

  • Engaged by the Senior Lender to affect a capital reorganization including solicitation of a cash infusion.
  • Subsequently, served as stakeholder representative implementing an operational turnaround.

Result Highlights:

  • Successfully led the turnaround of both divisions increasing EBITDA from negative $4.8 million to positive $5.5 million over a three-year period.
  • Following a three-year operational turnaround, SOLIC professionals served as the sell-side advisor in separate transactions for the two divisions, Bocchi Laboratories and Medicia Corp.
  • The improved operational performance and successful sale of the divisions resulted in 30+% annual returns to the investor group during the nearly three-year holding period.

BLI HOLDINGS CORP. / BOCCHI LABORATORIES

Restructuring

Company Description:

  • BLI Holdings Corp. was a contract manufacturer for the personal care industry with divisions in Santa Clarita, California and Dayton, New Jersey. Its two divisions – Bocchi Laboratories and Medicia Corp. – manufactured Paul Mitchell hair products, Victoria Secret body lotions, and other high profile personal care products.

Challenges Faced:

  • The company was in monetary default of its senior credit facility due to the loss of significant customers, poor senior management and an excessive debt level.

Solutions Provided by SOLIC Professionals:

  • Engaged by the Senior Lender to affect a capital reorganization including solicitation of a cash infusion.
  • Subsequently, served as stakeholder representative implementing an operational turnaround.

Result Highlights:

  • Successfully led the turnaround of both divisions increasing EBITDA from negative $4.8 million to positive $5.5 million over a three-year period.
  • Following a three-year operational turnaround, SOLIC professionals served as the sell-side advisor in separate transactions for the two divisions, Bocchi Laboratories and Medicia Corp.
  • The improved operational performance and successful sale of the divisions resulted in 30+% annual returns to the investor group during the nearly three-year holding period.

BOSQUE POWER COMPANY

Restructuring

Company Description:

  • Bosque Power Company is an owner/operator of a natural gas fired power plant providing energy and ancillary services to the Texas power market. The Company’s private equity sponsor had invested over $300 million of equity in the facility and lenders had provided over $450 million of debt financing.

Challenges Faced:

  • Bosque sought bankruptcy protection after declining wholesale electricity rates and excessive leverage resulted in its inability to service its capital structure. While Bosque initially planned to reach an agreement with its senior lenders in an out-of-court restructuring and presented a proposal to the lending group before filing, the parties were unable to reach an out-of-court settlement and Bosque sought bankruptcy protection.

Solutions Provided by SOLIC Professionals:

  • Served as financial advisor to Bosque for the Chapter 11 bankruptcy process.
  • Provided a review and assessment of the Company including: financial performance and outlook, current valuation analysis, competitive position and viability of the Company’s business plan, and senior debt transaction documents.
  • Identified and evaluated a range of strategic alternatives including (i) a Plan of Reorganization (POR) involving new equity from sponsor and a cramdown of exiting lenders, and (ii) a sale of the power plan with liquidation.

Result Highlights:

  • SOLIC professionals’ analysis and support during the contentious bankruptcy culminated in a successful sale of its power plant to Calpine for $432 million.

Alfred Angelo Bridal

Restructuring

Company Description:

  • Alfred Angelo Bridal (“AA”) was one of the world’s largest manufacturers and retailers of wedding dresses. Headquartered in Delray Beach, Florida, the Company also designs bridesmaid dresses, fashions for the mother of the bride, flower girl dresses, and wedding accessories.

Challenges Faced:

  • AA was a family-controlled business that had experienced significant management turnover and was facing growing challenges with both its retail distribution network as well as overseas suppliers. In addition, the Company had under invested in IT infrastructure and was experiencing significant disruption in managing its inventory. As a result, AA was in default of $40+ million loan.

Solutions Provided by SOLIC Professionals:

  • A SOLIC professional was named as Chief Restructuring Officer, replacing the CEO, and serving as an independent Officer of AA. SOLIC professionals undertook a review of all Company contracts, leases, litigation, to identify legacy problems; facilitated the consolidation of the corporate operations to Florida; expedited a transition plan for the IT systems; and, oversaw completion of a long-term business forecast and facilitated the foreclosure by the lender.

Result Highlights:

  • After facilitating an effective debt for equity exchange through a foreclosure process, SOLIC professionals were retained in an advisory position to continue to oversight the restructuring initiatives and turn-around plan that successfully stabilized the company, revamped its organizational design, consolidated its manufacturing operations, and renewed its growth trajectory.

WILTON PARTNERS TOLLWAY, LLC

Restructuring

Company Description:

  • Wilton Partners is a Los Angeles based real estate developer, which was awarded the opportunity to redevelop and operate seven buildings (“Oasis”) located over or adjacent to the toll road in and around Chicago. The Toll Highway Redevelopment Project was a $120 million public-private partnership between the Illinois State Toll Highway Authority (“ISTHA”) and Wilton Partners Tollway, LLC.

Challenges Faced:

  • Wilton Partners obtained a $85 million loan facility to fund the development of the Project. However, the Company was unable to make principal or interest payments due to extended construction on the Tollways that limited access to the Oases. As a result, walk in traffic fell precipitously and several tenants were forced to default on their monthly lease obligations.

Solutions Provided by SOLIC Professionals:

  • SOLIC professionals were retained by the Company to conduct an initial review and assessment of the project’s initial underwriting, review current and historical and current financials, and the achievability of its business financial plan and the associated debt capacity and valuation implications.
  • In addition, SOLIC was tasked to assist with the following items:
    • Prepare 13-week cash flow forecast for short term liquidity requirements.
    • Assist with leasing and marketing initiatives to improve monthly rent roll and boost occupancy rates.
    • Develop restructuring scenarios to assist in negotiations with Senior Lender and government entities.
    • Monitor the project’s ongoing activities and provide status reports to equity holders after successful restructuring.

Result Highlights:

  • During the course of the engagement, SOLIC professionals negotiated:
    • A debt restructuring with Senior Lender that bifurcated the loan into two pieces, a $50 million current pay loan and a $35 million PIK loan.
    • A restructuring with Illinois State Toll Highway Authority to provide a two-year rent abatement, forgo a full year of outstanding rent for its ground lease and future CAM subsidies, and reduction to monthly reserve requirements in exchange for a percentage of future revenues tied to specific marketing initiatives.
    • Wilton Partners ability to retain ownership without an additional equity investment.
    • Negotiated a new management fee arrangement to incentivize Wilton Partners to revitalize the Project.

BMJ Medical Management Inc.

Restructuring, Asset Management

Company Description:

  • BMJ Medical Management Inc. (NASDAQ: BONS) was one of the leading operators of ambulatory surgery centers, magnetic resonance imaging centers, physical therapy clinics, and musculoskeletal physician practices with annualized revenues of approximately $150 million, senior secured debt of $44 million, preferred stock investments of $7 million and public equity of $50 million.

Challenges Faced:

  • The Company’s capital structure was overleveraged and its business model faced significant litigation pressure from multiple stakeholders.

Solutions Provided by SOLIC Professionals:

  • Initially retained by the Board of Directors of BMJ (comprised primarily of equity sponsor representatives) to oversee BMJ’s restructuring efforts.
  • SOLIC professional appointed President and directed an orderly liquidation of BMJ’s operations in Chapter 11 pursuant to which over 30 separate business units were divested, 100% of the senior secured principal obligations were paid, and significant distributions were made to unsecured creditors and equity holders.

Result Highlights:

  • Developed and executed significant alternative recovery strategies involving numerous adversary proceedings based upon fraudulent conveyance analysis and other litigation support provided by SOLIC professionals.
  • Designed and implemented strategy of orderly liquidation, executing 30 separate settlement transactions among physician groups and ambulatory surgery centers.

PRIMECARE INTERNATIONAL

Restructuring, Asset Management

Company Description:

  • PrimeCare International was a California based integrated healthcare delivery system, operating hospitals, physician practices, diagnostic imaging centers, IPA’s and DME companies.

Challenges Faced:

  • Issues included significant financial losses, technical default on long-term debt, lack of liquidity, and regulatory challenges with its capitation agreements.

Solutions Provided by SOLIC Professionals:

  • Provided interim management including the interim CEO and supporting personnel.
  • Conducted an operational and financial assessment of the organization in which substantial opportunities for financial and operational improvement were identified.
  • The management team, led by the interim CEO, successfully implemented financial and operational improvement initiatives that resulted in significant savings through productivity improvements and other cost initiatives.

Result Highlights:

  • A comprehensive operating and an out-of-court capital restructuring plan resulted in a $120 million increase in revenues and over $50 million of annualized EBITDA improvements.
  • SOLIC professionals executed the successful sale of PrimeCare International resulting in a significant return for its stakeholders.

Representative experience includes transactions led by SOLIC professionals at predecessor firms