Focus Management Group

Publishing and Media Experience

Book Publisher & Distributor

Service:

363 Sale

Company:

A book publisher and distributor with annual revenues of more than $900 million was a leading provider of customized merchandising, wholesaling, distribution and publishing services to the book industry. The Company had operations in the United States, Mexico, the United Kingdom and Australia and employed approximately 1,200 people worldwide. To ensure the success of their book programs, the Company provided its retailer customers with book buying advice, promotional support and expert supply chain management.

Situation:

Phase 1
The publicly-held Company was in a cash crisis, as its liquidity was exhausted by legal fees incurred to defend against class-action lawsuits and governmental agency investigations, the costs of accounting restatements, reduction in sales levels and an increase in its returns percentage. The Lender Group was unwilling to provide necessary over advances without a comprehensive and detailed cash flow and operational roadmap to ensure the Company would be able to come back within formula.

Phase 2
After operating the business and exploring several strategic alternatives for nine months, the Company filed Chapter 11 in order to effectuate the sale of its assets through the 363 process.

Focus Scope:

Focus was retained as Consultant to the Debtor and prepared the filings for the bankruptcy, including the monthly cash flow reporting, post filing financial reporting and financial statements.

Tasks Performed:

Phase 1

  • A comprehensive weekly forecast allowed layering of multiple variables into a sensitivity analysis. This forecasting tool allowed a varied and detailed approach to analysis of multiple options presented by a constantly changing external environment.
  • The weekly cash flow forecasting tool was used successfully for two years as the Company went through the process of dealing with the Lender Group through the seasonal fluctuations in the industry, and analyzed various go forward alternatives, and then worked through the bankruptcy process.
  • Focus Professionals demonstrated the Company’s need for a short-term over advance and the subsequent ability to come back into compliance with the terms of the borrowing base.
  • Focus Professionals also supported the Company’s investment banker and were involved in discussions with several prospective acquirers.
  • Phase 2

  • Developed a comprehensive weekly forecast allowed layering of multiple variables into a sensitivity analysis.
  • Demonstrated the Company’s need for a short-term over advance and the subsequent ability to come back into compliance with the terms of the borrowing base.
  • Supported the Company’s investment banker and were involved in discussions with several prospective acquirers.
  • Prepared the Company for bankruptcy, including the monthly cash flow reporting, post filing financial reporting and financial statements.
  • Worked with a very active unsecured creditor committee to report weekly cash data and provide weekly cash forecasting.

Results:

The Company’s assets were successfully sold through the 363 sale process. The sale resulted in full payment to the Lender Group, including interest and fees, and a significantly higher recovery to the unsecured creditors than originally expected.

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