TMA Case Study Luncheon Series Session 3

Join TMA West Michigan for Session 3 in the 2016 Case Study Luncheon Series:

The Plan (2 months later) and Post Bankruptcy

Session 3 Discussion Topics to include: 
•Disposition of assets to fund restructuring costs
•Debtor and creditor counsel roles
•Going forward funding options and issues

Panelists: Traci Courter (Mercantile Bank), Marc Swanson (Miller Canfield) and Dan Yeomans (Amicus Management)

Moderator: Rachel Hillegonds (Miller Johnson)

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.
• Over leveraging the business to fund the acquisition and building expansion.
• Insufficient capital caused by over leveraging to fund technology investments needed to stay competitive in the industry.