Solutions Management .............
     a new approach to the troubled company.

Chapter Four: Restructure the Capital

Sale of Non-core Businesses and Assets
Most under-performing companies have non-core businesses, assets or product lines, which if sold, will provide additional cash. These assets are usually not integral to the running of the business.

OEM Capital Corp. has successfully completed many sales of businesses in industries which typically do not attract new capital. Such transactions are normally achieved by developing a creative approach to marketing the business or assisting buyers with financing.

Financial Restructuring and Securing Fresh Capital
Declining businesses may need an immediate infusion of working capital because available credit from the trade and existing lenders is exhausted. OEM strongly believes that rushing in with additional funds is not advisable. The root causes of the cash drain must be fixed first.

In addition to working capital, under-performing businesses often need money for plant repair or improvement or to finance the introduction of new products. These funds are normally provided as part of an overall financial restructuring.

In the case of one client, we arranged senior debt and preferred stock to replace a junk bond issue which was due for redemption. It provided additional working capital and made available funds to grow the business.

Reorganize Out-of-Court or under Chapter 11
Even the most stringent cost cutting program combined with obvious cash flow enhancers such as accelerating collection of trade receivables and the sale of non-essential assets may not be sufficient to generate enough working capital to keep the business viable. Sometimes the company is advised to file for court protection. Unfortunately, many medium sized companies filing for Chapter 11 never reorganize and all creditors, except possibly the secured lender, receive pennies on the dollar. Even if a company is fortunate enough to have its reorganization plan confirmed, the original investors are sometimes handed a bone which has already been picked clean! Even 'pre-packaged' Chapter 11 filings can become mired in the courts.

OEM Capital Corp. has successfully developed out-of-court settlement strategies which allow creditors to be paid if the company is given a payment moratorium and an extended period to repay. This type of settlement is not suitable in all situations but can be a valuable technique to breathe new life into an under-performing business. OEM has also been able to guide debtors-in-possession to satisfactory conclusions of their cases in both the Second and Ninth Circuits.