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Kik-Kin and MRP
Three days prior to Black Friday (the day after Thanksgiving,
known as the biggest retail day of the year), ARG received
a call from a boutique investment firm, with a problem.
It seems that the investment firm had a large position in
a publicly run MRI Imaging business, operating over 100
imaging centers. However, the MRI business also had a division
of 42 retail maternity stores and a ladies clothing manufacturing
facility in North Carolina (combined sales of $38 million).
The Stock Analysts were having a big problem understanding
why a medical business also included a retail and wholesale
clothing business and even more so, since these businesses
were losing money hand over fist. The stock was undervalued
at $4.50 and the decision was made to sell off these losing
businesses.
The investment firm decided that the businesses must be sold within 3 days, prior to its stockholders meeting. The principals of the firm wanted to announce the disposal of these businesses, which would increase stockholder share value and increase the stock price.
Working through Thanksgiving and the weekend, ARG managed to purchase both businesses and positioned senior consultants by Monday.
ARG personnel knew in advance that the retail stores were never going to be profitable and thus immediately placed the business into a pre-packaged bankruptcy, primarily due to many of its leases being in poor locations and low store volumes.
We then proceeded to liquidate the assets of the company and conducted an auction to sell of the leases and fixtures.
The manufacturing facility located in North Carolina, owed close to $1 million to a major asset based lender. ARG made the decision to operate the facility until the lender was made whole and a buyer was found to buy the building and hopefully maintain employment at the plant. In a little over 3 months, the bank was paid off, major retail accounts had their orders fulfilled, and a buyer was located to buy the plant, which ARG had an
obligation to purchase from the landlord (a large multinational manufacturer).
In the end, the secured creditors received full funding, unsecured received an out of court settlement,and the employees were able to keep their jobs.
The end result...The public companies stock went from $4.50 to over $20 within the year. The company was relieved of its personal obligations. The secured lender was made whole. Manufacturing employees were offered employment. The public company that owned the manufacturing facilities was finally paid after waiting 3 years for payment.
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