Case Studies 

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.

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.

Summit engaged directly with a national lender who was looking to sell its loan facilities associated with a middle market protein logistics and trading company.

Industry:  Agricultural Commodity

Subject: Middle market Texas based, top tier exporter of pork and other proteins into the NAFTA market

Circumstances:  Summit engaged directly with a national lender that expressed a desire to exit its lending relationship, comprised of a series of loans totaling $39 Million, with the company.  A subsidiary of the company had entered into a number of trade finance transactions in prior years that had led to significant cumulative losses, creating an over-leveraged balance sheet. The balance sheet issues were causing challenges with vendors, and the company was carrying aged accounts payable which needed to be addressed as part of the Summit transaction in the form of additional liquidity.

Solution: Prior to acquiring the bank debt, Summit and the sponsor group agreed in principal to the terms of a post-closing balance sheet restructure and additional loan advances to right size the accounts payable.

Outcome:

• The balance sheet restructure was completed post-closing
• The company has refined its business model by focusing on higher margin sales
• The additional loan advances allowed the company to pay down aged accounts payable
• The company has dramatically reduced its foreign currency risk exposure
• The company adjusted its business model and currently takes no principal risk on the product it sells by acting solely as an intermediary taking a margin between the seller and buyer for its logistical and sourcing services
• Summit is working with the company to refinance the ABL facility with more traditional capital at lower interest rates
• Summit continues to work collaboratively with the Company and has maintained a strong working relationship with the sponsors

A Midwest regional bank under increased scrutiny by its regulatory body approached Summit for a solution to its capital crisis.

Industry: Banking

Subject: A Midwest regional bank that was seeking a solution to its capital crisis.

Circumstance: This bank was under increased scrutiny by its regulatory body and approached Summit for a solution. Summit’s experienced professionals responded quickly to the client’s needs, evaluating the bank’s entire troubled loan portfolio and providing feedback on which asset classes’ disposition would be most helpful in the bank’s restructuring. Summit then provided pricing on certain requested asset classes on a loan-by-loan basis.

Solution: The bank needed to reduce its overall level of criticized assets, but due to the sensitive nature of its capital position, was unable to hold a public loan sale. After identifying a pool of assets that would quickly provide the liquidity the bank needed, Summit purchased a $20 million pool of 13 relationships that included performing assets, non-performing assets, real estate owned assets and fully charged off credits.

Outcome: As a result of Summit’s experience and ability to provide a capital solution across many of the bank’s asset classes, subsequent to this transaction, the bank asked Summit to review another selection of assets it wanted to dispose of in the following quarter.