Metis Partners was engaged by a UK Clearing Bank to assist with the resolution of an ongoing negotiation relating to an outstanding debt repayment between the Bank and a consumer goods business with a well-known, but niche, international brand.
The aim was to create a structure whereby the IP assets in the Company could be used as leverage to provide a restructuring solution acceptable to both the Company and the Bank. The Bank was motivated to pursue alternative restructuring options that would maximize the possible return for the bank, as secured creditor, following failure of company management to meet original deal payment schedule.
Metis Partners was engaged to provide the Bank with our opinion on the value of the company’s trade mark portfolio – a portfolio which the bank held security over. This was a significant IP asset but unrecognized in the Company’s financial statements. Metis Partners was also asked to provide potential debt restructuring solutions that could be achieved using the IP assets as collateral.
Metis Partners identified and narrated the critical IP assets that underpinned both its brand identity, and the current and future trading of the business using its Metisology® approach, providing transparency over the assets that were genuinely critical to the future business and its competitive advantage.
We provided an independent valuation of the IP assets that included a detailed narrative on the extent and quality of the IP, which was essential to the Bank gaining comfort over the restructuring options. We highlighted areas that required action to strengthen the IP and mitigate risks. With both management and the bank focused on improving the security value of the brand (TM portfolio) for the benefit of the bank, both parties were comfortable entering into debt restructuring negotiations.
In partnership with the Bank, and its advisers Ernst & Young, Metis Partners developed a restructuring option built around the setup of a Newco, into which the IP was to be transferred and then licensed back to the Company. The Newco would hold the valuable IP assets and the outstanding debt to the Bank. The trading Company now had removed a large liability from its balance sheet and was able to refinance.
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 bank took 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, which was now refinanced and with an achievable plan for growth.
This was a successful restructuring and an example of how historical investment in IP can be monetized to explore new funding options.
IP Assets Valued for Debt Restructuring – Brand and brand-related IP assets