Alvarez & Marsal

Laden with post-acquisition debt, countertop maker Formica Corporation began violating
financial covenants. Unsure of whether to grant a waiver or pursue an alternate strategy,
the company’s senior lenders hired Alvarez & Marsal as financial advisor. Alvarez & Marsal
assessed the banks’ security position and analyzed the reliability of Formica’s operations –
ultimately concluding that management’s projections were overstated. Despite this finding,
Alvarez & Marsal convinced the lenders to grant a short-term waiver, enabling them to
solidify their collateral position and the company to prepare for a “soft landing” in bankruptcy.
Alvarez & Marsal assisted banks in negotiating with potential buyers; Alvarez & Marsal
also negotiated with the unsecured creditors’ committee, and drafted terms for exit
financing. At the beginning of the process, senior debt traded at approximately 75% of par
value. When the company emerged, the lenders yielded cash and debt recoveries between
102% – 106% of original par value – a consequence of thorough due diligence and prebankruptcy
planning combined with a superior security position resulting from the initial
waiver negotiation.