Case Studies

Debt Restructuring of a Private School

J.S. Held Acquires Shechter & Everett to Expand Forensic Accounting Capabilities for Family Law Disputes in Florida

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Home·Debt Restructuring of a Private School

The Situation

Private Catholic School. 1,200 students. $9 million in sales. $50 million debt.

  • Donations and returns on investments in endowments had fallen significantly below projections.
  • The alumni donor base is primarily comprised of relatively small-dollar contributors – very few “wealthy name” donors.
  • Incurred debt to build/refurbish facilities with a plan for continued donations and investments in endowments.
  • The Great Recession led to a decline in enrollment, which underperformed projections for operating revenues and donations; the organization was slow to adjust its cost structure.
  • Debt was multifaceted, comprising a line of credit, bonds, a swap agreement, and a letter of credit.
  • Defaulted on swap obligation; senior lenders backing a letter of credit decided not to renew.
  • A forced change in the management team divided alumni/donors into two factions.
  • Public awareness of the situation would have a long-lasting negative impact on enrollment.

How We Advised

  • Extensive cost-cutting and a long-term plan for the replacement of teaching faculty.
  • Assessed the five-year cash flow forecast for feasibility.
  • Divested idle assets, realigned capex spend to donor-based initiatives.
  • Provided assessment of the situation along with options and recommendations for attainable solutions.
  • Ensured the board was informed and that major donors were actively engaged in exploring scenarios.
  • An out-of-court resolution, comprising replacement financing and a discrete capital campaign, allowed the bank group an acceptable exit.
  • All core facilities and services continued uninterrupted throughout this process.
  • Avoided public awareness of the situation.
  • Enrollment is not impacted by the events.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

> Debt Restructuring Services 
When a company is in financial distress, our Strategic Advisory experts design and implement debt restructuring and refinancing strategies tailored to the company’s unique circumstances. We help middle-market businesses stabilize operations, improve liquidity, and optimize their capital structures. 

 

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

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