Join TMA West Michigan for Session 1 in the 2016 Case Study Luncheon Series:
Avoiding Bankruptcy and Pre-Bankruptcy Issues for the fictitious company "Gametech"
Session 1 Discussion Topics to include:
•Out of court turnaround/restructuring process and options
•Sale opportunities
•Bank audits, forbearance and covenant violations
•Bailment agreements
Panelists: Doug Wilterdink (DWH), Dan Gosch (Dickinson Wright) and Trent Pierre (Chemical Bank)
Moderator: Elizabeth VonEitzen (Warner Norcross & Judd)
Time: 11:45 AM - 1:00 PM
Who should attend:Turnaround professionals, attorneys, economists, bankers, loan officers, business owners, and other professionals working in insolvency.
Case Overview:
• Gametech was formed in 1994 as an electronic bingo business with operations in the US, Canada and Mexico.
• Gametech acquired VLT in 2012. VLT manufactures traditional slot machines, video poker, keno and spinning wheel games. This represented 21% of Gametech revenue at the time of acquisition. The purchase price of VLT was $6.0MM; $4.0MM in sellers note, $2.0MM in cash.
• Revenue was $30.0MM in 2011, with the addition of VLT revenue reached $36.0MM on 2012.
• A new headquarters was built in 2012 shortly after the acquisition of VLT adding $5.0MM to mortgage debt. The real estate is held under a separate commonly owned limited liability company.
Issues Leading to Decline:
• After the combination of the businesses, senior debt exceeded $40.0MM:
*$2.0MM in revolving debt
*$38MM in term debt, including $15MM of mortgages ($5.0MM headquarters, $10.0MM mfg space)
• The Bank has a first security interest in all assets, including real estate. There are questions surrounding the perfection of these claims in Canada and Mexico.
• TM&E is valued at $19.0MM, real estate is appraised at $20.0MM ($7.0MM headquarters, $13.0MM mfg space).
• Gametech sells product through independent distributors and directly through a 3 person sales team.
• General decline in the gaming industry due to economic conditions and over expansion of the gaming industry nationally.
• Insufficient capital caused by over leveraging to fund technology investments needed to stay competitive in the industry
• Over leveraging the business to fund the acquisition and building expansion.
• Operational strain as a result of the acquisition of VLT.
Additional session dates to follow:
March 8, 2016 Session 2 – Bankruptcy (Chap 11) – First day motions, pension obligations, subordinate debt (seller financing), DIP financing
April 19, 2016 Session 3 - The Plan (2mos later) and Post Bankruptcy – Discuss the plan
AGENDA:
11:45 a.m. Registration and Networking
12:00 p.m. Lunch is served and program begins
1: 00 p.m. Close
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