Shields Legal Assists in Transitioning a Client’s Banking Relationship to Facilitate Company Growth.
Introduction
Problem
Our client’s aspirational growth plans ran into an unforeseen obstacle. The regional bank the company had been with since it was founded had reached the limits of what it could lend to the company. The regional bank also offered less than favorable economics and limited operational flexibility. After reviewing the company’s financials, existing loan documents, and plans, Shields recommended that the company consider refinancing with a more sophisticated bank. Concurrently, the company was busy with other challenging growth concerns. The company had initiated a corporate restructuring as well as a migration of accounting systems from QuickBooks to Sage. Moreover, the company recently had transitioned to a nationally recognized accounting firm and hired a new sales team to prepare for the company’s next chapter.
Solution
Shields Legal developed a strategy to move the client to a larger bank with lower interest rates 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 those banks. Shields oversaw a competitive process that provided the client with options in terms of availability, pricing, covenants, cash management functions, and relationships.
With guidance from Shields, our 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 with the regional bank.
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