Lampert Capital Markets
Lampert Capital Markets Case Studies
Dividend Recapitalization
  • Background

PAQ, Inc. and QSI, Inc. (jointly, the "Companies"), affiliated West Coast food retailers, engaged LDA to arrange approximately $105 million in debt financing with three clearly defined objectives: (i) facilitate multiple near term acquisitions and strategic initiatives; (ii) fund a dividend to the Companies' founders; and (iii) implement an institutional capital structure, limiting the need for a personal guarantee from the principal shareholders.

  • Financing Challenge

Non-sponsored dividend recapitalization concurrent with multiple acquisitions amid tumultuous capital market conditions.

  • Single lending facility for two separate companies with different shareholder bases

created additional complexity.

  • Shareholder dividend being paid out concurrently with substantial capital
  • investments.

  • Lack of private equity sponsorship limited the potential sources of capital.
  • Solution

Employ a broad solicitation process and identify lenders with industry familiarity and comfort with dividend related transactions

  • Rapid solicitation process included nearly fifty senior lenders and over one

hundred subordinated lenders.

  • Leverage investor network to prompt a more economic and efficient financing

solution from the incumbent senior lender.

  • Create sense of urgency for lenders, driven by acquisition timelines.
  • Result

After receiving multiple proposals for each tranche, two of the four acquisitions were delayed, thereby reducing the need for capital

  • The lender provided $75 million of senior debt, priced several hundred basis points

below their original proposal, while concurrently expanding the collateral base and simplifying periodic reporting.

  • $10 million shareholder dividend at closing with an ability to distribute additional

dividends during the term.

  • Founders' personal guarantee significantly reduced and further eliminated

in 24 months.

  • Subordinated lender remains available for additional capital to facilitate

future growth.