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Monitoring asset based loan on behalf of the lender

We were engaged by an asset-based lender shortly after it had closed a $35,000,000 credit facility to fund the purchase of a large processor of pecans by a private equity group. The initial purpose of the engagement was to monitor collateral but it was quickly determined that the projections upon which the transaction was predicated were flawed. We worked with the owners and management to prepare new projections which indicated that there were serious flaws in logic in the original projections. The new projections were adopted by the company and accepted by the lender and were used to monitor the business going forward.

During the remainder of the engagement collateral was continually monitored, projections were updated with a focus on the company's ability to supply key customers with whom it had supply contracts and to assess the possible impact on receivables from those companies if it failed to do so. Raw pecan purchases were monitored with the cash flow impact of those purchases incorporated in the projections. At all times  we ensured there was frequent communication  between the asset based lender,  company management and the private equity group helping to avoid an adversarial atmosphere from developing.

Ultimately the deal was refinanced and the asset based lender was paid in full.