Manufacturing Organization

CHALLENGES

The Great Recession decimated the auto and home construction industries and their whole supply chains. One of our larger manufacturing clients was a key supplier to both. Their revenues dropped by a third in a very short period of time and the company lost a substantial portion of its net worth before aggressive cost reductions kicked in. Their loans were jeopardized due to covenant violations and their primary lender was anxious and was itself in some distress along with other major banks. Despite the grim environment, our client was eager to position the company to acquire other competitors and expand market share. 

SOLUTIONS

  • Sharply defined the client's value proposition (why customers would not leave).

  • Made a strong case that the cost-cutting was extensive and effective (profits would return).

  • Identified a group of lenders with enduring reputations in the industrial arena and asked them to hear our story. 

  • Communicated to the lenders that we were looking for a critical long-term partnership and not just shopping for better pricing.

  • Insisted that each lender convince us of their long-term commitment to auto and construction industries.

  • Insisted on building relationships with the entire organization, not just the local lending officers.  

OUTCOME

Almost every lender made a proposal and a number of them were very aggressive. A few spent extensive time digging into the company and were able to be creative in accommodating the client's use of derivatives in its risk management program. Our client was courted heavily by the entire leadership chain within two major institutions, and we finally selected one our client was most comfortable with and closed on a large financing. A number of new relationships were formed with all of these institutions and our client enjoys a much deeper sense of liquidity and safety than it had in the past.

 

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