Client

UK Clearing Bank

Background

Metis Partners was asked to assist with the resolution of an ongoing negotiation relating to an outstanding debt repayment between a major UK clearing bank and consumer goods business with a well-known, but niche, international brand.

Assignment

Following some internal diligence and after a meeting with company management, Metis Partners issued an “initial findings report” to the bank which provided an opinion on the value of the company’s trade mark portfolio – a portfolio which the bank held security over.  This was a significant but unrecognised IP asset. Metis Partners also provided the company with an opinion on the potential value of their intellectual property (IP) and potential debt restructuring ideas using these IP assets.  With Metis Partners identifying how critical the company’s IP assets were to its brand identity and the current and future trading of the business, the next stage was to enter into debt restructuring negotiations with management and the bank focussed on improving the security value of the brand (TM portfolio) for the benefit of the bank. The aim was to create a structure whereby the IP asset value in the company could be used as leverage to provide a resolution appealing to both the company and the bank.

Our Approach

In partnership with the bank, and its advisers E&Y, Metis Partners ultimately developed a restructuring option built around management creating their own Newco into which the IP was to be transferred and then licensed back to the original company. The bank was delighted to have their working capital repaid and the debt (following a modest element of debt forgiveness) transferred into an IP Newco.

The deal would allow management to refinance the business, after removing a large liability from the company’s balance sheet.  The bank had new security from the IP Newco and had a clear line of sight as to how the debt was going to be repaid from license income from the trading business, now refinanced and focussed on growth.

The Outcome

  • General positive restructuring options for the bank and company management involving the use of intangible IP assets as a catalyst
  • Monetisation of historical investment in IP/brand through securing of a new funding option for the IP asset portfolio
  • Easing working capital constraints on the company, which could now pursue new options for future growth, whilst IP ownership was retained in a new separate company and licensed back to the trading business
  • Best possible return for bank (secured creditor) following failure of company management to meet original deal payment schedule

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Photo credit: Photos by David