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Blackmore Partners, alongside a Chicago-based private equity firm, discretely recapitalized the largest manufacturer of safety devices and simulators. Realizing the company was in breach of loan covenant, Blackmore Partners reached out to the company to offer debt restructuring. Together, Blackmore and a selected private equity firm brought debt relief to the niche manufacturer.
As a result of the overbought market in 2004-2008, the manufacturing company had fallen victim to the unstable economy. The aftermath of private equity firm's leniency forced 1,000's of companies into financial distress. Moody's reports that over 50% of the equity loaned during that span is currently underwater. Having received a $90 million loan from a private equity firm in 2007, the manufacturing company was also approaching default on its maturing loan. Since many private equity firms seemed to be kicking the can in order to avoid losses, Blackmore intervened, assisting the company in creating new equity value. Blackmore encouraged the company's management team to take action and become the catalyst in restructuring their finances, creating new equity value for the management team. Realizing they could spend the next spending 3 to 5 years climbing out of debt, they decided to take initiative and recapitalize with the help of Blackmore.
With previous experience in the distressed industry, Blackmore was prepared to guide the business through the recapitalization process. The initial phase was reviewing the company's financials to fully understand their level of distress. Blackmore then performed extensive research within the niche manufacturing industry to gather market data. After Blackmore had identified the market's size and key competitors, they counseled the company, refining the business plan to include strategies for growth opportunities from debt restructuring. With a deal thesis and business plan complete, Blackmore presented the actionable deal to select private equity firms that continually express interest in distressed companies.
A Chicago based, middle market private equity firm specializing in recapitalizations was intrigued by this opportunity and the growth potential exhibited by the company. Blackmore's strategic alliance, Akin Bay, provided the company and asset valuation for the company through due diligence. The firm provided fresh equity to buy-out the company's debt. The goal was to revive profits by purchasing the company's debt and convert their investment into profits.
Relief of the company's debt enabled them to once again lead the market in their niche product manufacturing. The company is now the world's largest creator of their specialized safety products and testing technology. This global company is committed to producing world class products and services through continuous improvement of design, process, and service. The company experienced rapid growth through newly developed products and services including: consultation, product repairs, test equipment, and specialty products. With their current increasing revenues the company has been able to pay off their debt and create new value for the stakeholder, making this deal beneficial for both the company and the private equity firm that it was brought to.