Successful Recapitalization of a Leading Owner and Operator of Cemeteries and Funeral Homes

Prior discussions between the Company and the lenders had been unsuccessful and difficult at times, leading to a breakdown in communications and trust. The Company had failed to meet forecasted performance as part of prior amendments, contributing to divergent views as to the appropriate strategy to optimize their outcomes among the members of the lender group.

As a publicly traded MLP, the underperformance of the Company and the pending debt covenant defaults had negatively impacted the Company’s equity value, limiting the ability to raise capital through an equity issuance. Also there was a significant gap between the intrinsic value of the company’s assets and current profitability of the business.

As a large operator of cemeteries and funeral homes, the Company oversaw over $900 million of trust assets related to future delivery of services on pre-sold contracts and the perpetual care of cemetery properties. Understanding the cash flow potential of these assets is unique to companies in the death care industry.

CMA helped the Company negotiate an amendment to its credit facility and raise bridge liquidity by developing a realistic plan and timetable for implementing both the Company’s turn-around plan and running a process to fully refinance out the existing senior secured lenders.

As discussions progressed with potential financing partners, the transaction evolved into a more beneficial solution that fully recapitalized the Company, including taking out the $175 million of subordinated notes with $385 million of senior secured PIK toggle notes and a $57.5 million convertible preferred equity investment. The new capital structure is expected to provide the financial flexibility and liquidity support to deliver on management’s turnaround plan.

• Establishing creditability and trust among the parties with open, honest and frequent communications was a necessary prerequisite to advancing the situation.
• Identifying the key issues for all constituent groups and incorporating those issues into the discussions was crucial to developing a consensual solution.
• By developing and communicating a clear and logical turnaround plan, the gap between underlying asset value and current performance can be bridged, allowing the Company to refinance its debt and secure the liquidity needed to execute on its plan.