• Identified potential eight buyers
  • Simplified ownership structure as a nonpublic company
  • Facilitated access to additional capital
The company was a Seattle-based coffee retailer that was unprofitable for years and eventually forced to file for bankruptcy. CR3 professionals were engaged as financial advisors and sought to maintain operations while managing 363 sale and bankruptcy processes. The team reduced back office overhead, closed unprofitable locations, and secured a buyer. The simplified ownership structured facilitated access to additional capital and allowed the company to take advantage of international opportunities.
 

The Situation

  • Seattle-based specialty gourmet coffee retailer and was a popular alternative to larger coffee chains with 114 locations and 500 employees
  • Generated revenues through two operating divisions: retail (store management) and specialty (franchise management)
  • Generated revenues through licensing fees from U.S. and foreign franchisees and sales of products to foreign customers
  • Was unprofitable due to high coffee prices, generating losses every year

The Work

  • Engaged as financial and sales advisor to generate cash and maintain operations
  • Closed 18 unprofitable coffee shops and reduced back office overhead by eliminating ten corporate positions
  • Developed and enacted plan to use credit card receivables as collateral, obtaining credit card cash advances to fund operations; lender was paid 20% of credit card receipts to pay down debt
  • Company’s complicated capital structure made it difficult to raise money to fund operations and capital expenditure needs, leading to bankruptcy filing
  • Commenced 363 sale process with goal of exiting bankruptcy in 90-120 days
  • Contacted more than 60 potential DIP lenders; ultimately secured merchant cash advance

The Results

  • Produced stalking horse bid from private equity group, identifying potential eight buyers in total
  • Sale enabled smaller footprint of profitable coffee shops with more efficient overhead
  • Simplified ownership structure as a nonpublic company
  • Facilitated access to additional capital and to take advantage of international opportunities

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