Evenflo Company, Inc.

CDG Role: Financial Advisor to the Senior Lenders for an Out-of-Court Restructuring

Background

  • Evenflo Company, Inc. (“Evenflo”) is a leading manufacturer and marketer of infant and juvenile products, including car seats, strollers, activity centers, and feeding products.
  • In late 2008, the Company retained counsel and advisors to discuss recent performance, near-term liquidity, its 2009 business plan, and the need for additional liquidity.
  • As a result, CDG was retained as financial advisor to the Senior Lenders.
  • At the time of CDG’s engagement, Evenflo had debt outstanding of approximately $187 million
    • $28 million of Revolving Credit
    • $114 million 1st Lien Term Loan
    • $45 million 2nd Lien Term Loan

 

Issues

  • Multiple factors placed pressure on Evenflo’s liquidity and margins in 2008:
    • Significant input price increases
    • An acquisition was funded with Revolving Credit
    • A car seat recall negatively impacted EBITDA and liquidity
  • Individually, these issues may have been manageable; however, combined with a steep revenue drop in November, these factors nearly depleted the Company’s liquidity.
  • A restructuring plan would likely involve extensive negotiations with the 2nd Lien lenders and equity sponsors, as well as an infusion of new capital in order to provide liquidity, conform trade payables to normal operating parameters, and provide financial flexibility through 2009.

 

Value to Client

  • Provided a detailed analysis of the Company’s comprehensive long-term Business Plan, including views on near-term liquidity needs, valuation, and debt capacity.
  • Assisted in monitoring and reporting the Company’s financial performance to the Senior Lenders
  • Along with the Agent and counsel, led negotiations on behalf of the Senior Lenders to reach a consensual, out-of-court balance sheet restructuring and amendment to the 1st lien credit agreement:
    • Full reinstatement and rate increase for the Revolving Credit and 1st Lien Term Loan
    • Conversion of 100% of the 2nd Lien Term Loan to equity
    • Capital infusion of new Preferred Equity