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Case Studies

US Baby Food Manufacturer

Consumer Packaged Goods

Diseño sin título 11

SIT­U­A­TION

  • Ini­tia­tive Foods (the Com­pa­ny”) was found­ed in 2002, is the largest US pro­duc­er of pri­vate label baby food, the third largest US pro­duc­er of baby food, and the only pri­vate man­u­fac­tur­er capa­ble of pro­duc­ing both organ­ic and nat­ur­al baby foods
  • Dur­ing 2020 to 2021, the Com­pa­ny was plagued with inter­mit­tent lock­downs relat­ed to Covid-19, which caused sig­nif­i­cant decreas­es in pri­vate label baby food sales at retail­ers, along with extend­ed peri­ods of labor shortages
  • In 2022, the Com­pa­ny began to rebound from the effects of Covid-19, but was deeply impact­ed by increased costs due to infla­tion­ary pres­sures (with­out asso­ci­at­ed price increas­es), which caused neg­a­tive EBIT­DA and neg­a­tive work­ing capital
  • In Feb­ru­ary 2023, Chi­ron was hired as a Finan­cial Advi­sor and exclu­sive Invest­ment Banker. The Com­pa­ny was in default with their bank senior-secured lender, had sig­nif­i­cant past-due accounts payable, and need­ed funds for growth initiatives

OUT­COME

  • Chi­ron as finan­cial advi­sor suc­cess­ful­ly nego­ti­at­ed with the incum­bent senior-secured bank lender to obtain for­bear­ance (which allowed the Com­pa­ny defer­ral of any prin­ci­pal or inter­est pay­ments for nine months), and assist­ed with a reduc­tion of lease pay­ments to a third-par­ty land­lord, imme­di­ate­ly increas­ing liq­uid­i­ty for work­ing cap­i­tal dur­ing the recap­i­tal­iza­tion efforts
  • Chi­ron assist­ed the Com­pa­ny with report­ing para­me­ters, build­ing cash flow mod­els and three-state­ment income pro­jec­tions, bal­ance sheet, and cash flow state­ments, as well as the build-out and imple­men­ta­tion of the strate­gic growth Capex plan
  • Chi­ron mar­ket­ed the oppor­tu­ni­ty to 400+ poten­tial cap­i­tal providers (includ­ing ABL, M&E, project finance, mez­za­nine, and equi­ty providers) to recap­i­tal­ize the Com­pa­ny, refi­nance the incum­bent bank lender, and ensure the Com­pa­ny had the prop­er liq­uid­i­ty and cap­i­tal­iza­tion to imple­ment its strate­gic growth Capex plan
  • Chi­ron suc­cess­ful­ly placed a mul­ti-tranche debt and equi­ty facil­i­ty, which exit­ed the incum­bent senior-secured lender at a ~66.4% dis­count and pro­vid­ed $6.9 MM in liq­uid­i­ty ($3.1 MM in work­ing cap­i­tal and $3.8 MM for growth Capex needs)

The Challenge

During 2020 to 2021, the Company was plagued with intermittent lockdowns related to Covid-19, which caused significant decreases in private label baby food sales at retailers, along with extended periods of labor shortages.

The Chiron Solution

In February 2023, Chiron was hired as a Financial Advisor and exclusive Investment Banker. The Company was in default with their bank senior-secured lender, had significant past-due accounts payable, and needed funds for growth initiatives

The Result

Chiron successfully placed a multi-tranche debt and equity facility, which exited the incumbent senior-secured lender at a ~66.4% discount and provided $6.9 MM in liquidity ($3.1 MM in working capital and $3.8 MM for growth Capex needs)

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