KGI Helps Fitness Company Get Pumped-Up

Overview
Our client is a fitness equipment distributor that primarily sells to hotels and universities. The business experienced a decline in revenues over the last several years causing its bank to be in an over-advanced position relative to collateral. After 18 months in the lender's workout department, the bank forced a change. The company needed to find replacement financing ASAP.

The Problem
As the company's sales declined from $35M to $27M, the lender's loan of $2M became under-secured. The bank could not increase the loan further and so it stopped advancing funds.

The timing was particularly unfortunate as the company's fortunes reversed at the same time. With a healthy spike in demand, new financing for increases in accounts receivable and inventory was critical to fueling growth. The company actively sought financing through traditional commercial lending channels to no avail.

The company actively sought financing through traditional commercial lending channels to no avail.

The Solution
The client brought in KGI to develop a turnaround plan and to help with the process of finding new financing. Once the lender knew KGI was on-board, the bank agreed to defer exercising its rights which bought the company needed time to execute the refinancing. The team made good use of the additional time.

The Results
With a credible plan and stabilized cash flows, the company got refinanced via a factoring deal with a bank. The previous lender received a paydown of more than 80% of its loan balance with the remainder to be paid over the next 18 months while retaining a second lien on the company's assets. The company is now being funded as needed to satisfy the demand for its product which has turned for the better. All parties are satisfied with the outcome.

Whether a Company is struggling financially or on the cusp of breakthrough growth, KGI can help. Our seasoned experts work alongside management to solve complex cash flow issues, operational challenges and other business crises. If liquidity or sale is needed, KGI provides a powerful combination of services and expertise to achieve outcomes that cannot be duplicated by other standalone consulting firms.