Mayhew

Furnishing growth in a time of turmoil

Like many businesses, Mayhew, a leading office design company, was hit hard by the 2008 global financial crisis and the years that followed. For the first time in its 40-year history, with roots going back to 1934, the third-generation, family-run business saw an abrupt and prolonged slowdown in sales of its office furniture—which caused a chain reaction of challenging events.

First, its five year banking relationship became strained—ultimately resulting in the bank calling in its $5.5 million bank line. Next, credit challenges with its key office furniture supplier escalated, ultimately leading to a legal dispute.

Despite these setbacks, the company was determined to get back on track. It underwent a major restructuring, essentially launching a new company—also called Mayhew—as a way of switching suppliers and, ultimately, reducing costs. It also reached out to a financing company, signed a term sheet and spent $25,000 in legal fees to replace its $5.5 million bank line, in a bid to relieve the bank of its arrangement. After a two-month process, however, the financing company began dragging its feet, and the transaction stalled.

In March 2015, Mayhew had reached what many would consider rock bottom. It was in the midst of an asset transfer and a law suit with its supplier. A financing company had taken out a security interest but was refusing to advance the funds, and the bank wanted its money back.

It was during this time that owner Marcia Mayhew decided to call Liquid Capital.

“Through word of mouth, I got Liquid Capital’s number. We met, they toured our business operations, and they got to know our team. It seemed to be a good fit and, most important, they understood the need to move quickly.”                                             – Marcia Mayhew, CEO & President, Mayhew

Quick turnaround

Recognizing that time was of the essence, Liquid Capital immediately put together a competitive term sheet—a $5.5 million asset-based lending facility that would allow Mayhew to take the bank out of the picture while simultaneously providing the working capital needed to continue operations.

Once the facility was approved by Mayhew, Liquid Capital set to work conducting the due diligence necessary to put it in place. An army of lawyers later—including those working on behalf of the new Mayhew company, the old Mayhew company, the original underlying shareholder, Liquid Capital and the bank—the complex deal was closed in under 4 weeks in June 2015.

The arrangement was different than traditional factoring contracts in that it was all non-notification—essentially, to the outside world, it looked just like regular financing. This was critical given the sensitive nature of Mayhew’s restructuring. The company wanted to preserve as many of its client relationships as possible, and to successfully move them over to its new suppliers, the company needed to appear strong.

“Liquid Capital was nimble and able to accommodate our needs during a time of change, transition, start-up and growth.” – Marcia Mayhew

Onward and upward

Over the next two years, Liquid Capital collaborated with Mayhew, giving the company the runway it needed to complete its restructuring. In that time, Liquid Capital provided over 50 fundings—and approximately $40 million in revolving credit—which allowed Mayhew to close less profitable locations, sell some of its assets and preserve many of its previous client relationships.

Liquid Capital also helped Mayhew establish new supplier relationships after the restructuring by providing around 40 supplier comfort letters. These letters essentially guaranteed that payment would be received before the furniture left the suppliers’ warehouses—giving Mayhew’s suppliers much-needed peace of mind.

With Liquid Capital’s help, Mayhew is now happy to say that it survived the most tumultuous era in its history and is enjoying established sales. While this is good news, it’s also bittersweet as the company recently acquired financing from a strategic investor and is parting ways with Liquid Capital.

“We’re now enjoying such positive performance that it’s time for us to reduce our financing cost, with the goal of moving to conventional financing within the next six to eight months.” – Marcia Mayhew

While their relationship is coming to an end, Mayhew will not hesitate to recommend Liquid Capital to anyone in search of financing assistance.

“Liquid Capital has been an excellent partner and reliable friend to Mayhew—through thick and thin,” Mayhew says. “For anyone looking for financing, I recommend looking for a firm that offers flexibility and really understands the direction you want to go in. You don’t want them to handcuff you from doing your business.”

“Liquid Capital has been an excellent partner and reliable friend to Mayhew—through thick and thin.” – Marcia Mayhew

 

Silani Cheese

The “cheese” may “stand alone,” but sometimes the company needs help

Great cheese does stand alone. Its character speaks for itself. However, mid-sized companies like Ontario’s Silani cheese can run into financial barriers that are hard to surmount without assistance, even when product quality and demand are high.

Silani Cheese, a family-owned company manufacturing a wide variety of specialty cheeses for over 60 years, had run into financial issues due to an unusual combination of circumstances. After some unanticipated cost overruns and infrastructure issues, as well as several contracts that failed to come through as expected (and for which it had purchased machinery), it naturally turned for help to the banking facility it had in place. Unfortunately, certain margin criteria in the banking arrangement unexpectedly changed resulting in a reduced credit facility, forcing it to negotiate an insolvency/restructuring proposal with its creditors.

During the restructuring process, the company had repaid its bank debt using personal funds as well as financing from Farm Credit Canada, but in order to fully exit the proposal, it needed a broader financing solution—one that factoring could readily deliver.

”The need was critical and two-fold. Coming out of a company restructuring process, we of course had to pay the creditors. But to get the business rolling and back on its feet, we needed a steady, reliable source of working capital.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Getting the right solution—from the right people

Factoring was the right solution for Silani’s issues, it just needed the right provider. After several months of working with another factoring company during the restructuring process, going so far as to complete due diligence and advancing to the point of signing legal documents, Silani expected a cash advance to take the deal forward. At the eleventh hour, however, the provider backed out. After a second factoring provider also failed to deliver timely, effective service, Silani finally came to Liquid Capital.

Despite arriving rather late in the process, Liquid Capital impressed immediately with their face-to-face approach, deadline-driven commitment and upfront clarification of what was possible in terms of timing. In the end, Liquid Capital negotiated the deal, completed due diligence and funded Silani on the timeline it needed—all in less than three weeks—enabling Silani to exit the insolvency proposal and repay part of the Farm Credit loan as well.

“The other companies we dealt with just weren’t cutting it. Their financing approach made us nervous, and they made promises they couldn’t keep. When Liquid Capital came in and took over the deal, everything changed. We were three weeks into problematic negotiations with the other company—with an irreversible deadline looming—and Liquid Capital jumped in, put everything together and closed the deal two days ahead of schedule.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Making the most of the factoring solution

As a cheese producer, Silani receives milk deliveries three to four times a week, and those deliveries have to be prepaid. The upfront cash demands of the business are significant and unavoidable, making a reliable credit facility a business essential. With Liquid Capital, Silani now receives multiple fundings every week, as needed, so it has all the working capital it needs—plus enough to plan for growth.

Liquid Capital’s ability to understand and effectively manage the legal and timing aspects of the insolvency process was also a huge advantage for Silani. There’s a finite time limit to execute on the terms of these deals, and if they expire, the deal is done—and so, potentially, could be the business.

“It was pretty clear that Liquid Capital had a good deal of expertise with insolvency matters. They were very knowledgeable about what the ‘real’ deadlines were and what had to be done. I’m not sure what would have happened without them.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Paving the way for success and growth

With insolvency and restructuring behind it, Silani is full steam ahead. It has a new operating facility with added capacity and room to grow, and it’s counting on Liquid Capital to provide the financial resources it needs to find and service new business.

Having returned to profitability, Silani is taking time to focus on the business by improving training, increasing efficiency and adding capabilities—for example by putting in automatic labelers—all without having to worry about funding.

“Liquid Capital did everything they said they would do. They made a proposal and that’s what they delivered, without deviating in any manner. It was just so different from the other companies we dealt with. Put your terms together and deliver—what more can you ask? A fantastic experience.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

 

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