Success Cases

Due to confidentiality agreements signed between ABEXA and its clients, work cases will be presented as “anonymous”; these cases illustrate ABEXA’s assistance to its clients in diverse situations.

Case 1 - PURCHASE OF A BUSINESS UNIT FOR A MULTINATIONAL CORPORATION.

Some years ago, Abexa was contacted by a multinational corporation with no activities in Argentina. Abexa was requested by this corporation to conduct an analysis aimed at determining the size of a specific Argentine market, identifying the main businesses in that activity, and finding out which of those main businesses would be interested in selling out or become partners.

Abexa undertook the preliminary analysis of the activity, detected the main players in the industry, held interviews with the top ten national businesses, and identified three of them as willing to consider offers for their businesses.

Abexa travelled to the corporation’s headquarters and put forward the results of its analysis, together with an action plan, which was aimed at maximizing the settlement of the corporation in Argentina.

The multinational corporation validated the plan presented by Abexa and granted it exclusive power to acquire at least two of the businesses presented.

Abexa carried out the entrusted task, and was able to take up two businesses with which the corporation settled in the country. The corporation has continued its activity in Argentina up to the present.

Case 2 - SALE OF A MASS CONSUMPTION COMPANY TO A FOREIGN INVESTOR.

Abexa was contacted by a leading mass consumer products business in Argentina. Although the company was stable, the shareholders decided to sell it and wanted to find a strategic buyer that would be consolidating businesses in the industry.

Abexa signed an exclusive sales proxy, and, jointly with the Board of the company to be sold, drafted a work plan. The goal of this plan was to identify the ideal strategic buyer. At least ten companies which could have an interest in this activity were identified. These businesses not only had presence in the industry but also showed possible synergies with the business to be sold.

Together with its client, Abexa drafted a description of the client’s business, its activities and its financial situation; it then contacted the strategic businesses that could be interested.

With that information in hand, confidentiality agreements were signed with every potential strategic buyer that had shown an interest, and the opportunity was presented to them.

The proposals of the candidate buyers were analyzed for several months until an offer that was satisfactory for Abexa’s client was reached. Once a binding letter of intention was signed by the parties, the negotiation of the final documents for the transaction and of the due diligence terms took place.

Five months after having started to work with Abexa, the business was sold.

Case 3 - RESTRUCTURING OF A CONSTRUCTION BUSINESS.

In its financial consulting practice, a client of Abexa carries out its activities in the construction industry. This client had specialized in the corporate construction sector, providing services to top companies needing to expand production plants, construct new logistical warehouses, etc. This client’s experience, reliability and precedents made it eligible by multinational and large national businesses in need of quality constructions under tight schedules.

The construction projects were awarded through bidding, and the business had to cut down its fees and utility considerably in order to be awarded each project.

This situation made the business seize a considerable amount of work, but with utilities that were cut down very much by the bidding process and by various characteristics of the industry where it carried out its activity.

Following a survey and diagnosis conducted by Abexa, the main shareholder of the business was encouraged to apply all that know-how to a different construction sector. The focus would now be on the multi-family home building business, and the business would assume the role of constructor and developer of such buildings. The idea was to apply the professionalism, the end-to-end construction management and the capacity to handle tight deadlines and costs, to a sector with higher turnovers for the business.

Once the proposal was accepted by the business’s main shareholder, the first lot was bought in the city of Buenos Aires, and a trust was formed for the construction of a ten-story building with four apartments per floor. Construction parameters and bonuses for completion were set on various deadlines.

This activity turned out to be successful, and it made the business restructure itself and aim its main effort at this activity, continuing with corporate construction only in those cases in which the utility was appropriate for the business. In this way, the business focused its prime effort on becoming one of the most important developers and constructors of the last twenty years.

Case 4 - REFININCING OF SYNDICATED LOAN AND SUBSEQUENT INCORPORATION OF PARTNERS

In the middle of the 2001/2002 crisis, Abexa was contacted by the principal partner of a group of businesses whose main activity had fallen drastically as far as turnover is concerned. As a result, the debts they were having with market banks became very difficult to pay off, endangering the group’s viability in the medium term.

Abexa held several meetings with the business’s Finance Management, with the purpose of making its own diagnosis of the situation. Following such diagnosis, Abexa drafted an action proposal to try to take the group out of the situation it was in.

The proposal presented to the creditors put forth a five-year plan, where the economic viability of the business was charted, and whereby a debt refinancing request would be submitted to the banks. This request focused mainly on the short-term debt, and encouraged the creation of a syndicated loan among all the creditor banks, in exchange for having more solid and better-shared warranties. The request was effectively issued to the banks.

Consequently, meetings were held with the creditor banks, selecting one of the main ones as leader of the syndicated loan. The warranties and the five-year plan were analyzed, and the agreement of 80% of the banks was achieved; as a result of this acceptance of the majority, the business was successful in improving its short-term performance.

Since one of the banks did not want to accept the conditions of the syndicated loan, Abexa carried out a second stage of assistance to the business group, during which it identified an investment fund with an interest in joining the share capital of this group. In this new situation, the bank that was in disagreement was offered the option to finance part of the investment fund’s share block buy, turning its credit with the business into a bridging loan with the fund’s stock acquisition. This was effectively carried out, and the result was a business group with a better-balanced debt/assets equation, the banks with a better-warranted debt (although at a lower rate), and an investment fund with a minority stockholding in the business.

Case 5 - CONSOLIDATION OF CABLE OPERATIONS.

A group of businessmen with long experience in the cable television industry in Argentina identified the opportunity to acquire a cable operator of a provincial town who was undergoing financial difficulties and was putting its business up for creditors bidding. These businessmen contacted Abexa to validate the investment hypothesis and assess the profitability of the existing business.

Abexa traveled to the cable operator’s town, and contacted the owner of the company in order to gather the most information possible. After several meetings, the business was deemed profitable, but due to a significant reduction in the number of clients, the business did not have the desired final result.

Based on the results obtained, a survey of all the cable operators in the area of influence was undertaken. At least eight smaller cable television businesses were spotted in nearby locations; these businesses could be acquired and consolidated under a single business. This would in turn allow seizing an appropriate client base, synergizing the buy of signals, and optimizing the administrative, commercial and network maintenance structures.

With this information, a proposal was submitted to the businessmen in the form of a master plan. A key aspect of this plan was the simultaneous acquisition of the initial business and of at least two of the eight identified cable operators. The businessmen approved this master plan, and Abexa started off the acquisition tasks.

Three definitive purchase options were signed, and once the critical mass that yielded the expected profitability of the business was secured, the acquisitions took place. In this way, the original business and five of the eligible cables were bought, consolidating a very profitable operation, which was sold three years later to one of the three main consolidators of this type of operation in the country.

Case 6 - SALE OF A BUSINESS PORTFOLIO FROM ONE FUND TO ANOTHER FUND.

One of Abexa’s first cases was the valuation of an investment portfolio of a fund that was operating in the region for almost ten years, and had the intention of selling its entire portfolio. This was due to its having reached the point of divestiture and refunding invested capital to its investors.

The fund’s Board wanted to know the value of the businesses portfolio it possessed and survey the possibility of finding another fund that would be interested in buying the fully constituted portfolio, avoiding partial sales that would imply more time and effort.

Abexa conducted an information survey for each of the businesses that made up the portfolio; it participated in followup meetings of each business in order to determine objectively the plans of each of them. Together with a team of lawyers, Abexa evaluated the fund’s protection agreements in each business, as well as other specific characteristics of each of the investments. Each holding was assigned a value, and a projection was drafted for each business applying the discounted funds flow method in order to validate that value.

Furthermore, having an investment portfolio already constituted was considered an additional value. This encompassed the investment vehicle, agreements already signed, etc., and was therefore valued independently.

Finally, a search for funds interested in acquiring the full portfolio was conducted. This search identified two funds with a concrete interest. These two funds competed in the bid improvement process, which then yielded one definitive fund that finally acquired the stock portfolio.

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