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.
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.
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.