ABOUT THE COMPANY:
Headquartered in Toronto, Ontario, CIBC Innovation Banking (“CIBC” or “the Lender”) specializes in lending solutions for entrepreneurs and investors in the innovation economy.
SITUATION:
In the first half of 2023, a CIBC portfolio company (“Company”) defaulted on its bank agreement and requested relief. This wasn’t the first time the venture capital-backed payments as a service (PaaS) platform had signaled an SOS. The Company, founded in 2020, had submitted a series of inaccurate budgets and forecasts, leading CIBC to explore an outside cash-flow assessment and explore strategic alternatives.
ENGAGEMENT:
"G2 Capital Advisors (G2) was engaged by CIBC to conduct a one-month diagnostic Phase I Assessment focused on liquidity and cash flow management assessment, business and operational strategy review, refinancing options, and strategic alternatives.
Completed in May 2023, the Assessment revealed a $15 million gap in the Company’s FY2023 forecast and delivered three possible solutions:
1. Sell the Company
2. Invest in a long-term commitment to the Company
3. Refinance out of its investment in the Company"
OUTCOME:
CIBC opted to take the third option and began working with the Company to reduce expenses and improve profitability, starting with a reduction in employees (34%) and contractors (4x). In tandem, G2 leveraged its high-quality network to identify aligned [alt: receptive; interested; targeted] lenders and ran a streamlined process that resulted in the creation of a new lending syndicate. G2 raised $65 million through the new syndicate to refinance the existing loan. Through this refinancing, CIBC was able to recap its initial [add: $25 million] investment in full while the Company gained access to $20 million, which it required to continue operating—and without which, it would have been $15 million short.
DEAL TEAM:
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Exclusive Restructuring Advisor
G2 was engaged as Chief Restructuring Officer (“CRO”). Through the CRO, G2 developed and executed liquidity management tactics for the Company and its stakeholders.
Exclusive Restructuring Advisor
G2 was engaged to facilitate negotiations for more favorable payment terms with key vendors, aiming to optimize cash flow management.
Exclusive Restructuring Advisor
G2 was engaged to perform a Phase 1 strategic alternatives assessment.
Exclusive Restructuring Advisor
The Company engaged G2 as its Chief Restructuring Officer. Through the CRO, G2 developed and executed liquidity management tactics for the Company and its stakeholders.
Exclusive Restructuring Advisor
G2 conducted a rapid Phase 1 Assessment and developed a report that included an assessment of the business, operations, and financial condition of the Company, short-term liquidity, near-term capital requirements, and strategic alternatives.
Exclusive Restructuring Advisor
The Company engaged G2 to assist in building the long-term financial model, a 13-week cash flow forecast, facilitate negotiations between the Company, the sponsor, and the lender group.
Exclusive Restructuring Advisor
G2 was engaged to complete a Phase 1 assessment of the Company’s financial forecasts and its ability to return to pre-COVID levels of financial performance.
Exclusive Restructuring Advisor
G2 conducted a Phase I Assessment focused on liquidity and cash flow management assessment, business and operational strategy review, refinancing options, and strategic alternatives.
Exclusive Restructuring Advisor
G2 worked alongside creditors and management to develop a Phase 1 Assessment. G2 advised the lenders with respect to the financial position of the Company.
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