Consensual Agreement: Reduce existing debt by $26 million, equity retains 100% of the Company

Company: International music education company with $60 million of revenue, over $55 million of debt, and $5.0 million of past due trade payables, and positive EBITDA which was declining and at an insufficient level to service its capital structure. Senior Lenders, who were owed approximately $16 million, declared a default and threatened forcing the Company into bankruptcy to compel a quick sale.


Working closely with Management and the Company's Investment Advisor, KGI:

  • Secured $30 million of New Debt Facilities: Generated a significant amount of new liquidity and working capital to grow the Company.
  • Repaid Debt: Repaid in-full, the Senior Lenders, all past due trade payables, and all closing costs.
  • Restructured Junior Lenders: Reduced second lien lender debt from $28 million to $15 million, and converted $13 million to preferred stock. In addition, other junior lenders totaling $13 million agreed to completely cancel their debt in exchange for $3 million of preferred stock.
  • Retained Equity: The shareholders retained 100% of their equity interest.
  • Preserved Enterprise Value: The orderly completion of this transaction resulted in an enterprise value being substantially greater than all other strategic options, including Company sale or bankruptcy reorganization.


Working side-by-side with the Company's Chief Financial Officer, KGI assisted the Company with the following:

  • Organized and facilitated the exchange of data, information and proposals among various groups, including the Company, creditors, and new lenders.
  • Negotiated forbearance agreements with Senior Lenders.
  • Built a value creation plan, substantially increasing Company profits and cash flow over five years.
  • Increased short-term financial performance compared to prior year, achieved new financial projections, and built credibility with all key constituents.
  • Assisted with cash flow projections and liquidity management.
  • Assisted with presentations and due diligence with new capital sources.

Whether a Company is struggling financially or on the cusp of breakthrough growth, KGI can help. Our seasoned experts work alongside management to solve complex cash flow issues, operational challenges and other business crises. If liquidity or sale is needed, KGI provides a powerful combination of services and expertise to achieve outcomes that cannot be duplicated by other standalone consulting firms.