Refinancing A Story Credit Is Best Done With An Advisor (i.e. FinAdvisr.com)

When a CFO is asked / told to find new financing from their incumbent bank (especially if they are in the special assets group), the CFO may assume that finding a new lender will be easy.  Unfortunately, it does not work out that way.  Finding a new lender is a major undertaking, and is especially challenging when recent financial performance is less than stellar / below plan.

The CFO may balk at hiring an advisor and try to find new financing on their own.  This is generally an unsuccessful endeavor for the following reasons:

·        Lack of network of non-bank lenders and specialty lenders who are more willing to do story credits.

·        Unorganized approach including:

o   No timeline defined,

o   Information not organized in a data room,

o   Neither a Confidential Information Memorandum (“CIM”) or teaser were completed to help a lender quickly understand the opportunity.

·        Competing daily priorities of the CFO.

Keys to a Successful Store Credit Refinancing

Hiring a financial advisor like FinAdvisr.com can improve the likelihood of success.  The advisor’s defined task is to complete the refinancing; this focus is key!      

A successful refinancing requires proper pre-planning.  Pre-planning steps include:

·        Establishment of a teaser,

·        Establishment of a CIM,

·        Compilation of a list of likely lenders for the deal,

·        Establishment of a data room,

·        Defining a timeline for the refinancing.

After the pre-planning is complete, it is time to go to market with the deal.  This is where the timeline serves to keep the process from drifting.  A typical timeline will span 120 days, and include the following milestones:

·        Distribution of teaser to prospective lenders,

·        Receipt of lenders’ indications of interest,

·        Completion of due diligence by prospective lenders,

·        Receipt of final term sheets from prospective lenders,

·        Closing date.

Regular scheduled communication with management and the incumbent lender are key to keeping all parties informed on the process, and whether any adjustment to the timeline needs to be made.

Conclusion

Companies can struggle with refinancing when done by themselves. 

For the above mentioned reasons, refinancing a story credit is best done with an advisor (i.e. FinAdvisr.com).  Please contact s.grabish@finadvisr.com to learn more about how FinAdvisr.com can help with the refinancing process.