BearingPoint, the McLean, Va.-based management consulting firm, has put in place a five-year, $150 million asset-based revolving credit line with UBS and received a $40 million investment from private-equity firm Friedman, Fleischer and Lowe (FFL). The financings, which resolve liquidity issues and provide gunpowder for acquisitions, come at a critical moment for the firm as it seeks to put accounting woes behind it.
Harry You, BearingPoint's ceo and interim cfo, has been pursuing the credit line since joining BearingPoint in March. You, who as an investment banker at Morgan Stanley helped bring the company public in 2001, informed investors in April that it was looking for a $100 million receivable bank financing.
"After reviewing our business operations, UBS had the confidence to increase the amount from $100 million to $150 million," You said in a conference call. The ABL line is backed by BearingPoint's accounts receivables balances and is priced at LIBOR plus 2% for six months and has grid pricing thereafter, which ranges from LIBOR plus 1 1/4-2 1/4%. UBS is sole lead arranger and administrative agent and General Electric Capital Corp. is collateral agent. The facility will primarily provide letters of credit and other collateral to support surety bonds primarily for state and local government practice. He also said that for the past two months, BearingPoint has been seeking an additional $40 million through FFL for two strategic acquisitions.
These acquisitions will be the first since 2002 when prior management embarked on a series of purchases including the business consulting division of Anderson. The prior Chairman and CEO Randolph Blazer resigned last November after four years in charge. The company announced weaknesses in its internal control and financial reporting and has delayed filing the 2004 10-K. In December, Moody's Investors Service downgraded the company to Ba2 from Baa3 citing weak operating performance and a cost structure that had grown significantly faster than revenue. Another factor was the company replacing a $250 million unsecured revolver led by JPMorgan with a $400 million, 150-day secured revolver led by Bank of America. The senior implied rating is currently B1. Explaining the choice of UBS, a spokesman said the previous interim facility carried deadlines and structures. "We wanted a clean slate with a new lender," he said.
