Case Study

Commodity Broker

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The Fire

  • A $175 million (annual revenue) commodity brokerage company (one of the largest Independent Interdealer Brokers) found itself overleveraged and in covenant default with bank over-advances.

  • After one year of failed attempts to negotiate and workout a forbearance agreement, their revolver and term loans matured, resulting in covenant defaults the company losing all credibility.

  • The lender, in jeopardy of losing well over $22.5 million (and their collateral value of ~$100 million in co. equity), began freezing the company’s assets and cash accounts, which would have immediately put the company out of business, and especially because they are NFA/CFTC entities and are beholden to unencumbered minimum capital (cash) requirements and regulatory compliance.

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The Rescue

  • A MACCO CRO, managing director and director were engaged to assess the financial and operational needs and negotiate a forbearance agreement.

  • MACCO conducted an expedited and comprehensive world/tri-continent operational and financial review to determine the future cash flow outlook and capabilities and financial reporting.

  • An accurate 13-week cash flow was developed to assess revenue, liquidity and company viability.

  • Weekly meetings were established to keep the bank informed and engaged with MACCO acting as the liaison.

  • Provided financial and operational advice to management and the Company’s attorneys/counsel.

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The Result

  • MACCO successfully negotiated and executed a very favorable forbearance agreement between the company and the lender.

  • MACCO successfully reestablished company credibility and communications with the lender.

  • The bank unfroze the company’s accounts and allowed the company to operate freely, under the condition that MACCO provide general oversight during the forbearance negotiations.

  • The company almost immediately began to have record months in revenue and the company was able to make their over-advance payments, including principal and interest payments to the lender, and achieve positive cash flow and achieve and maintain a positive 8-figure cash balance.