Case Study # 5:  Corporate Restructuring and SEC Filings

The Client:  A publicly traded company that was developing its initial product and had exhausted its ability to raise additional capital needed to continue to the development of its products.  The company was looking to restructure and seek a merger partner that would be beneficial to shareholders.

Additionally, the company had developed a poor relationship with its auditor due to delinquent payments resulting in a work stoppage on the audit.  This resulted in the company  being late in its filings with the Securities Exchange Commission (SEC).

The Task:  Arrange a loan to bring the account with the auditors current,  assist the company in preparing its filings with the SEC, implement a restructuring program including negotiating a debt to equity conversion with creditors, and seek a merger candidate.

Issues:  Failure to achieve the stated tasks would result in a bankruptcy filing by the Client and complete loss to shareholders.

Plan of Action: 

Coral Capital immediately accessed the Client’s situation and was able to arrange a loan that allowed the Client to bring its account current with its auditor.  This enabled the auditor to restart work on the Client’s annual audit.  Coral Capital began assisting the Client’s CFO with its interaction with the auditor and in the preparation of the Client’s filings with the SEC.  The Client was able to regain its status as current in its filings with the SEC.

Concurrently, Coral began negotiations with the Client’s creditors, starting the discussions on an debt to equity conversion.  The negotiations lasted approximately 60 days.  Coral was subsequently able to convert the substantial majority of the Client’s debt to equity.

Following the completion of the negotiations with the creditors a merger candidate was located and Coral assisted in the negotiations and closing of the transaction.

Results:

Coral successfully obtained a loan for the Client allowing the Client to move forward with key aspects of the restructuring plan.  Coral successfully negotiated a debt to equity conversion with the Client’s creditors, without which the merger could not have proceeded.

The successful efforts of Coral allowed the Client to restructure its debt and find a merger partner which preserved shareholders value.