Shields Legal Assists a Growth Oriented Client in Transitioning from a Regional to National Banking Relationship with Enhanced Borrowing Availability and Flexibility.

Introduction

Shields Legal represented an agricultural and food business that had a close relationship with a regional bank. The owners had ambitious plans to grow their business.

Problem

The client’s growth plans required additional operational flexibility, favorable economics, and revolving credit availability. The regional bank had reached the limits of what it could lend to the company. The regional bank also offered unfavorable economics and limited operational flexibility. After reviewing the client’s financials, existing loan documents, and plans, Shields advised the company to consider refinancing with a more sophisticated bank. Simultaneously, the client was also undergoing a corporate restructuring, a migration of accounting systems from QuickBooks to Sage, a transition to a nationally recognized accounting firm, hiring new sales teams, and a host of other challenges as part of its growth plans.

Solution

Shields developed a strategy with the client to move to a larger bank with a lower interest rate and more borrowing availability. Shields created a data room for the client and, after negotiating non-disclosure agreements with a few potential banks, worked with the client to provide financial statements and other information sufficient to receive term sheets from these banks. Shields oversaw a competitive process that provided the client with options in terms of availability, pricing, covenants, cash management functions, and relationships.

With help from Shields, the client selected a national bank with deep experience in the agricultural and food industry and a local presence in the client’s community. Shields negotiated a term sheet with the bank before turning to definitive financing documents and closing. Drawing on knowledge of the market and expertise, Shields successfully negotiated lower and fewer closing fees and a favorable interest rate. Shields worked closely with the client to establish new availability criteria in the term sheet for their line of credit and successfully included items under the new facility that were not permitted under the prior facility.

As sometimes happens, there were unexpected issues with the bank’s approval as closing approached. The bank requested a new corporate guarantor less than a week before the anticipated closing date. Shields negotiated to add the new guarantor post-closing and coordinated all parties to a timely closing.

As part of the closing process, Shields provided a legal opinion and worked with local counsel on a secondary legal opinion. Shields also arranged for payoff letters and terminations with the regional bank as part of the refinance process.

Conclusion

As a result of Shields Legal’s efforts, a client with ambitious growth plans closed on a new credit facility providing ample availability to continue to grow and meet anticipated future capital needs. The client also realized significant savings due to the favorable economics that Shields helped negotiate. Finally, as an added bonus, the owners’ personal guaranties under the prior facility were extinguished in the refinancing process.