Beaulieu Group: Financial Advisor, Interim CRO & Private Sale

Situation Overview:

  • A leading residential and commercial flooring manufacturer was experiencing a steady decline in revenue over the previous 10 years due to industry shifts from soft surfaces to hard surfaces and increased competition.
  • The company’s existing credit facility matured in mid 2017 and due to its financial condition existing lenders were reluctant to commit to a renewal without a restructuring plan and possibly an equity infusion.
  • Armory was initially retained by the company to provide financial advisory services as the client anticipated a covenant breach and significant liquidity concerns in the near term. Armory was later engaged to serve as CRO.

Armory Solution:

  • Armory developed a 13-week cash flow and collateral forecast including updated operating and restructuring initiatives.
  • Armory assisted the company with refining the US business plan and financial forecast using key initiatives including: plant streamlining, SKU rationalization, cost reduction strategies across the organization and monetizing excess plant capacity.
  • Significant improvements in operations were realized however the weight of historic claims, excess facility cost and deferred obligations were material.
  • Armory negotiated several forbearances with the secured lenders to obtain working capital financing under its existing revolving loan agreement.
  • Armory negotiated with several capital sources including existing lenders to restructure the balance sheet or find new capital, but it was clear that a Chapter 11 proceeding was needed to provide time for a proper transaction.

Engagement Results:

  • Armory assumed the CRO role and managed the company through the bankruptcy and ultimate sale of substantially all of the Debtors’ assets with intention to hire substantially all of the Debtor’s manufacturing and administrative employees.
  • Armory successfully negotiated a private asset sale to a strategic buyer for a $90mm all cash deal which closed approximately 90 days after filing for bankruptcy protection.
  • Armory sold the remaining assets for approximately $4.0mm to various parties adding to the recovery for secured and unsecured creditors.
  • Secured lenders received a 100% return of their capital.
  • Armory and the unsecured creditors committee filed a joint plan of liquidation to distribute the remaining proceeds from the sale to remaining creditors.