Case Studies

Turnaround Improves Value for All Stakeholders

J.S. Held Acquires Clark Seif Clark, Strengthening West Coast Capabilities for Environmental Claims, Disputes, and Catastrophe Response

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Home·Turnaround Improves Value for All Stakeholders

The Situation

  • The Company generated a peak EBITDA of $50 million, which declined to $21 million, largely due to the rapid decline of TGI Friday’s and labor cost increases.
  • TGI Friday’s brand (52 locations) was in the Casual segment and was experiencing a long-term decline, even before COVID, due to a lack of investment by the Franchisor. ​
  • Proprietary brand (22 locations, Casual segment) and Wendy’s (+100 locations, QSR segment) were significantly affected by the onset of COVID. ​
  • The owner had affiliate entities that owned and leased restaurant locations to the Borrower. Certain leases were not at arms-length “market” rates.​
  • The Bank Group had a risk of loss of over 30% of its loans. 

How We Advised

Our experts served as Financial Advisors to the Bank Group, collaborating with the Company’s Financial Advisor on a turnaround plan that was implemented over a two-year period.

  • Closed 27 negative cash flow locations after negotiating lease terminations with the landlords. ​
  • Sold the TGI Friday’s Brand back to the Franchisor to eliminate negative cash flow.​
  • Closed the proprietary Brand to eliminate negative cash flow.
  • Established delivery relationships with Grubhub, Uber Eats, and Postmates. ​
  • Renegotiated location leases with lease rates 50% to 75% lower than existing rates in return for extensions. Negotiated certain lease payments as a % of revenue. ​
  • The owner sold over 30 real estate locations to third-party landlords, thereby eliminating a conflict with the Borrowers. ​
  • Reduced corporate overhead by $3.4 million on an annual basis.
  • EBITDA increased to $34 million and is growing on just the remaining Wendy’s brand.
  • The owner injected $25 million of new capital into the business, and Bank Group restructured approximately $180 million of debt.
  • Banks are expected to be repaid in full, including default interest. ​
  • The Company avoided bankruptcy and a 363-sale process that would have resulted in over $30 million in bankruptcy expenses and sale deductions/adjustments.​
  • Approximately 2,500 jobs preserved.​
  • All trade creditors and employees are paid in full.​
  • The owner kept the business, which has significant long-term value potential.

Key Contacts

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

 

Colin McClary 
Managing Director 
Strategic Advisory Practice 
+1 630 300 4887 
[email protected] 

Related Practice Areas

> 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. 

 

> Solutions for Distressed Situations 
We deliver integrated solutions for distressed and insolvent businesses that maximize recovery, mitigate risk, and restore enterprise value. Our experts are retained to help distressed organizations stabilize operations, protect stakeholder interests, and execute turnaround strategies. We take an operationally-focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. 

Our Experts