Case Studies 

Summit formed a joint venture with a global metal casting company to partner on the financial restructuring of a manufacturer of cast gray and ductile iron parts.

Industry: Metal Casting/Manufacturing

Subject: A manufacturer of cast gray and ductile iron parts for the automotive, trucking, trailer, appliance and compressor industries, headquartered in Auburn, Indiana.

Circumstance: After filing for bankruptcy and a failed restructure attempt with its senior lenders, the company announced that it would liquidate its assets. Prior to the scheduled 363 sale, Summit acquired $25 million of debt from two lending institutions.

Solution: Summit was approached by a premier global metal casting company who was interested in partnering on certain assets of the manufacturer. In less than four weeks, Summit formed a complex joint venture whereby the JV partner supplied the operating expertise and Summit supplied the capital to re-establish operations of one of the manufacturer’s plants.

Outcome: As part of the financial restructuring, the manufacturer obtained a new financing package, which partially refinanced out some of the debt held by Summit. The re-established plant enjoyed tremendous success and growth during its first year of operations, exceeding expectations.

Summit’s JV partner successfully removed Summit two years ahead of schedule (under prearranged terms), completing a successful turnaround. Today, the company’s original operators run the flagship plant of the JV partner’s six casting plants, generating in excess of $500 million in revenue. Due to the mutually beneficial and strategic relationship established during this transaction, Summit and its JV partner continue to investigate other ventures together.

A medical device company approached Summit about forming a joint venture to secure financing to acquire additional intellectual property rights.

Industry: Medical Devices

Subject: A medical device company seeking to add to its intellectual property and distribution rights.

Circumstance: This medical device company approached Summit about forming a joint venture to secure financing to acquire additional intellectual property rights out of a pending bankruptcy. This would allow the medical device company to control all of the necessary requirements to manufacture and distribute the underlying product.

Solution: Summit worked extensively with its partner to devise an acquisition strategy for the joint venture entity that resulted in a successful purchase of the intellectual property rights out of bankruptcy.

Outcome: Following the successful acquisition, Summit has worked with management on a strategy that has enabled the product to reach more patients and allow for better patient treatment. Today, this medical device is available worldwide and is considered the leader in wound/protector devices.

Summit was approached by a middle market investment bank to assist an over-leveraged agricultural company provide an exit to its bank lender, restructure its balance sheet and provide working capital liquidity.

Industry:  Agriculture

Subject:  Middle market California based produce grower

Circumstances:  Through an investment banking intermediary, Summit worked with the equity holders of a private company to acquire six debt tranches totaling $52 Million, held by a national bank interested in exiting the credit by quarter end. The company had experienced significant labor cost issues in prior periods, leading to margin deterioration, negative operating cash flow and a consequential increase in funded debt. Debt/EBITDA was in excess of 8X at the time Summit was engaged. In addition to the debt purchase from the national bank, the company required a committed Asset Based Loan (ABL) facility to be funded shortly after the debt purchases to finance critical vendor purchases in advance of the company’s key annual growing season.

Solution: Prior to acquiring the bank debt, Summit and the equity holders agreed in principal to the terms of a post-closing balance sheet restructure which included a new ABL. At the same time Summit addressed the bank’s requirements by providing a quick close.

Outcome:

• The balance sheet restructure was completed post-closing on the pre-agreed terms and the new Summit ABL allowed the company to ramp up production for its peak growing and selling period
• The company’s performance has improved significantly as a result of a right sized balance sheet, operational improvements executed by a now focused management team and a capex program implemented to drive improvements in productivity
• Summit was then able to assist the company in refinancing the Summit ABL with a national bank at attractive rates
• The company is looking to refinance Summit’s transitional term debt with more ideally priced senior secured debt in the near term
• Summit continues to work collaboratively with the Company and has maintained a strong working relationship with the stakeholders

The interim management of an industrial and construction equipment rental company sought an expedited turnaround plan.

Industry: Industrial and Construction Equipment

Subject: Eagle High Reach Equipment, LLC, headquartered in La Mirada, California, was a provider of rental equipment to the industrial, construction and entertainment industries. The company rented aerial work platforms, forklifts, trucks, backhoes and other industrial and construction equipment from its four locations in Southern California.

Circumstance: Summit was approached by the interim management of Eagle to support the company’s financing turnaround. Prior management of Eagle had been accused of fraudulent financial activities, which left the company seeking an expedited turnaround plan to avoid terminated credit lines.

Solution: In less than two weeks from the initial contact with interim management, Summit completed due diligence and agreed to a complex joint venture with Eagle, which included purchasing the senior secured debt of Eagle and providing the company equity. During this period, Summit worked extensively with interim management to assess the overall financial health of the company and its assets and to begin the implementation of the turnaround plan.

Summit worked with Eagle’s management to stabilize the company’s operations, which included securing a $30 million asset-backed loan that would partially refinance out Summit’s debt, help complete the planned restructuring and provide ongoing working capital and capital expenditure funds. Together, Summit and Eagle closed this refinancing transaction in less than two weeks under terms that provided an adequate financing facility to fund the company’s growth and future operations.

Outcome: Based upon positive market conditions, Summit and Eagle’s interim management began to explore a sale of the company. Just over two years after Summit first became involved with the transaction, Eagle was sold to a larger competitor as part of an initial public offering.

A Southeast regional bank turned to Summit to assist with the divestiture of a pool of troubled loan relationships.

Subject: A Southeast regional bank with whom Summit had a longstanding relationship.

Circumstance: Through the years, Summit had helped this bank manage its loan portfolio by buying single troubled loans on a one-off basis. As real estate in the Southeastern United States (Florida in particular) was becoming a troubled asset class, the bank turned to Summit to assist with the divestiture of a pool of 15 loan relationships.

Solution: Working together, the bank assembled a pool of six relationship assets totaling $10 million for Summit’s purchase that would help the bank meet its liquidity goals. After performing due diligence on the selected pool of assets, Summit and the bank agreed upon a closing price. Working with documents already negotiated in previous transactions made the closing process streamlined and efficient, reducing both the time involved and expense to the bank.

Outcome: Shortly after the sale of this small pool to Summit, the bank contacted Summit about another transaction that had come into its Special Assets group. Once again, the bank and Summit were able to execute a quick transaction. As a result of Summit’s professionalism, speed and experience, the bank has continued to partner with Summit when seeking an exit strategy as market or asset conditions change.

The owner of a West Coast investment group approached Summit about raising capital to expand other business lines within the company.

Industry: Real Estate Investing

Subject: A wholly owned subsidiary of a West Coast investment group specializing in mortgage- and real estate-related assets. The subsidiary consisted of a portfolio of sub-leasehold interests in freestanding retail stores.

Circumstance: After having been turned down by several other investors, the owner of the investment group approached Summit about raising capital to expand other business lines within the company, offering the sub-leases as collateral for a loan. The master leases had been written more than 20 years prior and reflected market pricing from that time. Current pricing for the subleases was valued at a significantly higher price, giving the portfolio a value equal to the difference between the master lease and sub-lease payments.

Solution: After careful examination, Summit determined that because the master leases lacked ownership of any tangible asset, collateralization would be impossible. Instead, Summit proposed an outright purchase of the subsidiary, but because of the increasing value of the sub-leases and the portfolio’s value, the company’s owner was not inclined to sell the subsidiary outright. As a compromise, Summit and the investment group came to an agreement that Summit would purchase the subsidiary for $8.5 million, with the current owner having a purchase option that could be exercised when financial conditions allowed.

Outcome: Today, the investment group is making its quarterly option payments to purchase back its former subsidiary. In addition, Summit structured a management agreement with the investment group, who continues to provide day-to-day management of the portfolio on a fee basis, enabling them to maintain and enhance the portfolio’s value.

A full-service marketing company came to Summit as a failed roll-up on the brink of bankruptcy, looking to Summit to acquire its debt.

Industry: Sales/Marketing

Subject: A full-service marketing company headquartered in Chicago and specializing in direct mail production and message tracking as well as database analysis and targeting. It utilizes industry-leading data intelligence, technology and an intense client focus to produce dynamic, results-driven communications that drive response and ROI.

Circumstance: This marketing company came to Summit as a failed roll-up on the brink of bankruptcy whose sponsor, a large private equity firm, had essentially abandoned it by turning the board over to a national restructuring firm. Summit was approached about acquiring the debt. Over the preceding seven years, the equity sponsor had acquired twelve autonomous direct marketing providers and merged them into eight divisions within the client company with little centralized direction. As a result of the poor performance of the acquired purchases, the company was severely over-leveraged and unable to meet its current obligations.

Solution: Summit acted quickly and was able to purchase approximately 55% of the senior debt (while another large investment group purchased the remaining 45%). Due to the nature of several of the subject’s customer contracts, bankruptcy was not an option if the company was going to survive. Therefore, in concert with the other investment group the assets were acquired via an Article 9 sale into a new entity with some of company management being retained. The new entity was properly capitalized to help it weather the transition and pay critical vendors who in many cases were significantly in arrears. Summit worked with the company to immediately consolidate two divisions and create synergies among the remaining six. Through the restructuring the company experienced no loss of its customer base including retaining all government contracts.

Outcome: Summit held this position for 10 years as we worked with the company to strengthen its balance sheet, improve gross profit margins to north of 35% and triple EBITDA. We weathered one of the worst financial crises in U.S. history, bought out the other financial owners, recapitalized the company with a traditional ABL facility and eventually sold the company to a traditional financial buyer.

An aftermarket aircraft-parts supply company approached Summit for help with quickly completing the international purchase of two MD 90-30 aircraft.

Industry: Aerospace

Subject: An aftermarket aircraft-parts supply company.

Circumstance: In need of a financial partner, the company approached Summit in order to quickly complete the international purchase of two MD 90-30 aircraft located in Taiwan. In less than three weeks, Summit developed a financial and operating agreement with the company, resolved international tax and legal issues associated with the transaction and re-certified the aircraft with the FAA.

Solution: In connection with the closing, the aircraft were flown to California for inspection by all parties, and the transaction closed successfully. The V2525-D5 engines were immediately sold to another financial institution, and Summit’s operating partner began to part out the aircraft and pre-market the nacelles, avionics and other flight control surface parts.

Outcome: Both Summit and the operating partner continue to share in the economic profits of this transaction. The planes have been fully parted out, and Summit has some inventory remaining for sale.