Alternative Financing

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Provides information on different types of capital. Includes information on senior debt, junior debt, and "debt-equity".

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Alternative Financing

  1. 1. Credit Management Association Alternative Financing July 15, 2009
  2. 2. Firm Overview <ul><li>Bailey & Elizondo LLC is a professional services firm that performs advisory services primarily to middle- </li></ul><ul><li>market companies. These services provide financial, operational and strategic alternatives to the decision-making </li></ul><ul><li>process of our clients in order to affect their business goals and objectives and to maximize shareholder value. </li></ul><ul><li>Seven principal areas of financial advisory: Corporate Finance, Liquidity Solutions, Restructuring & Turnaround, Transaction Advisory, Portfolio Monitoring, Forensics & Due Diligence, and Litigation Support. </li></ul><ul><li>The deep domain expertise and credibility of our team enable us to assist our clients with their needs and provide differentiated value-added services in helping evaluate their strategic alternatives when facing complex decisions or transactions. </li></ul><ul><li>We bring decades of insight, experience and expertise in dealing with crisis and tough situations. Our experience spans banking, commercial finance, transaction advisory, and international public accounting. Messrs. Bailey and Elizondo have closed over $10 billion in transactions over the last 10 years. </li></ul><ul><li>Our clients include public and private companies, banks, financial services companies, mezzanine lenders, private equity funds, venture capital firms, institutional investors, secured and unsecured creditors, trustees, receivers, management teams, boards of directors, special committees, State and/or Federal courts, law firms, accounting firms and other financial intermediaries. </li></ul>
  3. 3. The Principal’s Past Experience <ul><li>Howard Bailey </li></ul><ul><li>GE Capital Experience: </li></ul><ul><li>Western Region SVP for GE Capital’s Restructuring Finance Group focused on debt recaps both in and out of bankruptcy </li></ul><ul><li>SVP Origination responsible for SF Bay Area </li></ul><ul><li>Team Leader Portfolio & Underwriting; managed $2B portfolio; Structured, underwrote, approved and executed on $5B in new business opportunities </li></ul><ul><li>Prior to GE Experience Highlights: </li></ul><ul><li>Established Western Region for BankBoston in 1997 </li></ul><ul><li>1990-1995 Loan Workout/Special Assets Group </li></ul><ul><li>Management Training Program </li></ul><ul><li>Field Audit Examiner and Manager </li></ul><ul><li>Other: </li></ul><ul><li>Turnaround Management Association Executive Committee and Board member </li></ul><ul><li>Commercial Finance Association past Chairman </li></ul><ul><li>Speaker and panel member, including the Association for Corporate Growth, Commercial Finance Association, American Bar Association and Turnaround Management Association </li></ul><ul><li>Education : </li></ul><ul><li>BSBA from University of Hartford </li></ul><ul><li>MBA from Northeastern University, with High Honors and a member of Beta Gamma Sigma </li></ul><ul><li>Carlos A Elizondo </li></ul><ul><li>GE Capital Experience: </li></ul><ul><li>Team Leader for GE Capital’s Global Enterprise Client Group responsible for relationship management and new business development </li></ul><ul><li>SVP Relationship Manager for Western US customers </li></ul><ul><li>VP Origination SF Bay Area; Formed Electronics Industry Verticals within GE’s Corporate Lending Group </li></ul><ul><li>VP Portfolio & Underwriting; Led deal teams, structured, underwrote, sought credit approval, closed and managed portfolio of customers </li></ul><ul><li>Led and closed over $6B in loan commitments </li></ul><ul><li>Arthur Andersen Experience: </li></ul><ul><li>Business and transaction advisory services </li></ul><ul><li>Managed audit teams and clients </li></ul><ul><li>Executed buy-side/sell-side diligence engagements for private equity investors and strategic buyers </li></ul><ul><li>Created detailed valuation models for MD&A analysis </li></ul><ul><li>Education : </li></ul><ul><li>BA in History from The University of Texas at Austin </li></ul><ul><li>MAcc from the University of Southern California; Leventhal Academic Fellow </li></ul>
  4. 4. Agenda <ul><li>Types of Capital </li></ul><ul><ul><li>Senior Debt </li></ul></ul><ul><ul><li>Junior Debt </li></ul></ul><ul><ul><li>“ Debt-quity” </li></ul></ul><ul><li>Other Thoughts </li></ul><ul><li>Q&A </li></ul>
  5. 5. Senior Debt <ul><li>Traditional Bank Financing </li></ul><ul><ul><li>Not dead, particularly healthy regional banks </li></ul></ul><ul><ul><li>Leasing, for both you and customers </li></ul></ul><ul><li>Asset Based Financing </li></ul><ul><ul><li>Accounts Receivable and Inventory </li></ul></ul><ul><ul><li>Factoring </li></ul></ul><ul><ul><li>Inventory Finance </li></ul></ul><ul><ul><ul><li>Traditional </li></ul></ul></ul><ul><ul><ul><li>Floor Planning </li></ul></ul></ul><ul><ul><ul><li>Trade Finance </li></ul></ul></ul><ul><ul><li>Purchase Order Financing </li></ul></ul><ul><ul><li>Private Label Credit Cards </li></ul></ul><ul><li>Small Business Administration </li></ul>
  6. 6. Junior Debt <ul><li>Second Lien Debt </li></ul><ul><ul><li>Secured, behind senior lender </li></ul></ul><ul><ul><li>Could be part of revolver formula (i.e., additional 5-10%) </li></ul></ul><ul><ul><li>Additional term loan </li></ul></ul><ul><li>Mezzanine Debt </li></ul><ul><ul><li>Secured or unsecured, often with warrants </li></ul></ul><ul><ul><li>Can be unsecured, but senior to other unsecured creditors </li></ul></ul><ul><li>Subordinated Debt </li></ul><ul><ul><li>Usually unsecured </li></ul></ul><ul><ul><li>High coupon, often with warrants </li></ul></ul><ul><li>“ Debt-quity” </li></ul><ul><ul><li>Usually unsecured, but can be in tranches </li></ul></ul><ul><ul><li>High coupon, with right to take control upon default </li></ul></ul><ul><ul><li>Often smaller private equity funds </li></ul></ul>
  7. 7. Other Thoughts <ul><li>Vendor Support </li></ul><ul><ul><li>Payables - extend these terms by working with vendors for programs as extended payment terms </li></ul></ul><ul><ul><li>Captive vendor programs </li></ul></ul><ul><li>Friends and Family </li></ul><ul><ul><li>Depending on size, possible sources of funding </li></ul></ul><ul><li>Government Programs </li></ul><ul><ul><li>EXIM </li></ul></ul><ul><ul><li>Subsidies or grants </li></ul></ul><ul><ul><li>Industrial Development Bonds </li></ul></ul><ul><ul><li>New Market Tax Credits </li></ul></ul>
  8. 8. Contact Us

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