Background:

Lampert Debt Advisors acted
as exclusive financial advisor to Katun Corporation, a portfolio company of Monomoy Capital Partners, and privately placed a $37.6 million multi-currency Senior Secured Credit Facility, $20.0 million of Senior Subordinated Notes and a €6.0 million Foreign Factoring Facility. Proceeds of the transaction were used to refinance existing indebtedness, facilitate Katun's acquisition of Media Sciences International's toner cartridge business and for general corporate purposes. LDA worked closely with Katun's senior management as well Monomoy's principals on all aspects of the transaction including structuring, marketing and negotiating the financing with the senior and subordinated lenders.

Financing Challenge:

Recent unsuccessful debt offering combined with the complex nature of the business and industry

  • Early stage of financial performance improvement

  • Substantial foreign revenue currency exposure

  • Significant IP exposure

  • Take-out of related party capital

  • LOI to acquire MSI entered in mid-offering required marketing
    "shift on the fly"

Solution:

Employ a broad solicitation to attract lenders with industry familiarity and a mandate to invest internationally

  • Leverage investor network to prompt more economic and efficient financing solution from the incumbent senior lenders

  • Arrange new subordinated debt to allow MCP to extract bridge capital, with no equity dilution

  • Maximize euro funded debt to create a natural foreign currency hedge and support future growth initiatives

Result:

Refinancing facilitates strategic acquisition, creates natural FX hedge and returns sponsor provided sub-debt for redeployment

  • Senior Credit Facility upsized by 30% (not including $5 million accordion) with a concomitant rate reduction and improved covenant flexibility

  • Placement of $20 million of senior subordinated notes, exceeding target offering size by $5 million and resulting in a full return of sponsor bridge capital

  • Extended maturity profile and positioned Katun with the requisite growth capital to expand both organically and through acquisition

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