Rapidly evolving engineering and environmental consulting firm finds loan covenant relief at a reasonable price.
• Engineering and Environmental Consulting Services Firm serving Louisiana, Texas, and Gulf Coast Region (Kerry in FL)
• Employee-owned through an employee stock ownership plan (ESOP)
Headquartered in Baton Rouge, Louisiana, Providence recently consolidated and shifted the focus of its business. The financial challenges that sparked this organizational transformation also required the firm to refinance a term loan. Providence struggled to find a reasonably priced lender, until The Pitney Bowes Bank took the time to understand the intricacies of its evolving business.
The Pitney Bowes Bank, Inc., Member FDIC offered both a term loan and a revolving line of credit. The interest rate and terms met the firm’s needs, and the transaction closed in just three weeks.
Providence had been operating in the disaster recovery sector, performing damage assessments and other services after natural disasters. This industry faces unique financial challenges because payments often take 180 or 360 days to arrive. With cash flow pressures mounting, Providence decided to refocus the organization.
“We re-prioritized our business to environmental services and engineering,” explains Happy Giroir, CFO of Providence. “We streamlined our organizational structure, reducing five entities to three, and focused on services that have a higher margin and much faster turn on receivables than disaster recovery.”
The company also needed to restructure debt. It had a term loan with a large national bank, and it was out of compliance with the loan covenants.
Unfortunately, the bank’s approach to lending was very standardized. It looked at Providence’s recent struggles with large, slow receivables and ignored the company’s turnaround plan.
“We needed to find a financial institution that would look not only at our recent financial statements, but also at our story,” Giroir says. “We were doing all the right things to turn the ship around, and we saw huge growth opportunities ahead.”
Giroir met with more than two dozen financial institutions before she discovered The Pitney Bowes Bank. “We had plenty of opportunities for ridiculously expensive financing, like factoring facilities, but that’s not what we wanted,” she says. “Our goal was to find more traditional, lower-cost financing, but with an institution that would accept a little higher risk. There were not a lot of options in that middle ground.”
Several factors complicated the financing process. First was a short timeline: Less than a month remained in the period the national bank had given Providence to close on funding to replace the existing term loan. Second, Providence is owned by an employee stock ownership plan (ESOP), which introduces legal complexities in borrowing. And third, every financial document that was more than three months old reflected a completely different organizational structure.
“This required the lender to invest time in understanding which entities survived the restructuring and how our revenue is now rolling through the remaining entities,” Giroir says. “The team from Pitney Bowes gave us the opportunity to provide documentation that supported our story of how we were evolving. There were a lot of questions, a lot of discussions, and thousands of emails. But it all came together at the end of the day.”
The Pitney Bowes Bank refinanced the term loan and provided a line of credit as well. “They offered us a reasonable interest rate, and we closed in just three weeks. I’ve been in banking and finance for 40 years, and I’ve never seen a loan of this size close in such a short time.
Everybody at The Pitney Bowes Bank dropped what they were doing and made this transaction happen," Giroir says.
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