5.0.-14.0. EDSR 09-13-1993 - Laserfiche WebLink

Home Browse Search

• Liabilities consist of $1M in accrued payroll taxes, and three existing notes payable. The company has $12M in existing bank debt, $2.5M in debt payable to a relative, and $10M in debt payable to stockholder. Because the N/P-Stockholder may be considered as pseudo-equity, the ratio of total liabilities (net of stockholder debt) to tangible net worth (incl. pseudo-equity) currently is 1.33:1. In order to facilitate the purchase of the office condominium by the corporation, Kevin Kloeppner will personally inject $15M of equity into the business. Assuming the approval of the proposed Elk River Economic Development Loan and SBA loan, the ratio of total liabilities (net of stockholder debt) to tangible net worth (incl. pseudo-equity) becomes 3.9:1. The N/P - Stockholder will be put under a standby agreement. Because of the specialty nature of this laboratory, RMA industry comparisons are not available. COLLATERAL: All existing debt is extended on an unsecured basis. The SBA loan would be secured by a first REM on commercial real estate, and a first secured interest in all A/R, Inventory, Equipment, and Intangibles. Kevin is willing to pledge a $10M deposit account as additional collateral. A real estate appraisal complying with FIRREA guidelines will not be required by the bank because the mortgage amount is $75M. • Collateral analysis is as follows: ADVANCE ADVANCE LIQ. LIQ. SOURCE VALUE % VALUE % VALUE CRE Cost $107M 70% $ 75M 60% $ 64M A/R Book 7M 50% 4M 40% 3M Equip. Book 11M 75% 8M 60% 7M Deposit Cost 10M 100% 10M 100% 10M TOTAL $135M $ 97M $ 84M SBA Loan $ 75M REPAYMENT ABILITY: The primary source of repayment for Water Laboratories' proposed loan is the cash flow from Water Laboratories' operations. The cash flow of Water Laboratories, Inc. had been satisfactory in FY 1992, with adequate coverage of debt service obligations. A traditional cash flow analysis would be as follows: •