Situation
Our client, a 100% ESOP-owned S corporation had $183MM in debt and due to a decline in its industry in 2013, it was at risk of not meeting certain financial covenants related to its debt. We helped it engineer a sale of its real estate to a REIT.
Result
Our client’s debt was reduced to $43MM, and going forward it will expend only half of its cash flow on rent, which resulted in a significant increase in equity value to the ESOP and avoided potential default on its loans.