Jan 24, 2012

Journal Updates

Hired a new sales associate today after a couple months of interviewing. 

Submitted a letter of intent to GE Capital and Wells Fargo to buy out their respective $5.7MM and $6.7MM equipment-based loans for a discount.

Under the new terms, the loans would be restructured into 5-year loans at 6-8%, and we'd be getting a 50%+ discount on the face value of the notes.  Best part: we'd be fully secured in the event we had to liquidate the equipment and obtained less than salvage values. 

We're of course trying to help turnaround a distressed industrial processes business whose loans are coming due in the next few months, whose current operations can no longer support the debt.

The consultant I'm working with has a history of navigating the maze with distressed companies and has succeeded in 100% of his cases to avoid filing for bankruptcy.  I told him that was pretty impressive, but unless the lenders are willing to take a serious haircut or restructuring of the debt here, they're going to have to file Chapter 11.

Sometimes you have to be the "3rd Alternative" for a 3rd Alternative solution to play out between 2 opposing parties.

Our proposal is contingent upon the debtor agreeing to enter into a new loan and turnaround program with us.

We'll see if they go for it.

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