A Midwest-based 3PL Serving the best interest of the client
In 2007, a 30-year old, highly-regarded third-party logistics company β3PLβ with $50 million in revenues and $3 million in operating cash flow (EBITDA) began to experience a contraction in its business as the U.S. recession began to exact its toll on the companyβs clients. As the contraction continued through 2009, the 3PL failed to generate the necessary earnings and cash flow to meet its bank covenants.Β
In the wake of the deep recession in 4Q 2008 and the subsequent government bailout of many financial institutions, the bank lending environment had turned significantly more conservative. The 3PLβs bank also changed its market strategy and set a 4Q 2010 deadline for the full repayment of its loans and the exit of the company from the bankβs roster of clients. The bank also advised the 3PL that it was unlikely to find a new lender and therefore it mandated the 3PL to hire an investment bank to facilitate a sale of the company in order to repay its loans. The 3PL hired Republic Partners with its bankβs approval.Β
Republic Partnersβ Solution
By the spring of 2010, the U.S. economy began to recover and the 3PLβs business also showed signs of a rebound. The owners of the 3PL preferred to refinance rather than to sell the company outright because a sale after the economic recovery would potentially yield a significantly higher price. While Republic Partners was initially hired to sell the company, the Firm realized that serving its client effectively meant exploring refinancing options in addition to finding potential buyers. Republic Partners continued to serve its client enthusiastically and diligently, even when it was clear that the clientβs preferred option would require twice the work (e.g., finding both potential buyers and lenders) and most likely yield the lowest fees to the Firm.
On behalf of the 3PL, Republic Partners approached potential business partners, including traditional banks, subordinated debt lenders, private equity, and strategic acquirers. After reaching out to nearly 50 counter-parties, Republic Partners was able to present the owners of the 3PL with multiple letters of intent for debt, equity, and hybrid solutions.
The 3PL refinanced its debt before the deadline. Today, the owners of the 3PL continue to operate and grow the company.Β Β Β