Service Type: Refinancing
Client: Reed, Inc.
Client Description: An “S” Corporation that operates gas stations and c-stores with QSR’s, operates a cardlock facility and a 24 hour fitness center, and owns real estate investments generating rental income. The Company also supports its c-store operations through an affiliate fuel distribution business with Shell-branded fuels, unbranded fuels, and a transportation fleet for fuel deliveries.
- A multi-generational family operated business, the Company developed a need for liquidity when a senior member of the family passed away.
- In response to the unfortunate circumstances, the Company decided to purchase the spouse’s shares in the S-Corp.
- In order to finance the purchase of non-managing family members’ shares, the Company approached Corner Capital to explore structures and options for accomplishing this objective.
- The Company’s main objectives in its engagement with Corner Capital Advisors was to develop a new financing plan to trim its financing costs, while providing some liquidity for the acquisition of the founder’s spouse’s stock in the Company.
- Timing proved to be a crucial element to this transaction, and the Company requested that Corner Capital deliver a closed refinancing on an aggressive timeline.
- Certain locations were impacted by environmental contamination.
- A potential impediment was the payment requirement of “yield maintenance” by a single lender.
- Corner Capital Advisors proposed a package refinancing 94% of its existing loans to a new lender, collateralized by the Company’s portfolio of c-store assets.
- As part of the transaction, Corner Capital secured a new term loan on a fully amortizing schedule.
- To address the issue of meeting the Company’s request for financing by deadline, Corner Capital structured the transaction so lending terms were attractive to potential investors and creditors, with a projected Loan to Value well within financeable metrics. Additionally, certain rental properties were excluded from the collateral base with the new lender.
- Corner Capital Advisors successfully executed the refinancing transaction, receiving multiple proposals for the financing, on significantly better terms than the existing debt structure.
- The Company’s newly financed debt structure reduced the length of its loans. The key advantage to this was that the new amortization schedule effectively reduced the Company’s overall interest expense and rapidly de-levered the Company.
- The Yield Maintenance requirement was negotiated to an acceptable level to accommodate the refinance.