Iowa Pacific Holdings, LLC

PROJECT DESCRIPTION

Oversee railroad holding company turnaround

BACKGROUND

Even well-run holding companies can rise and fall on the strength of the national economy. This successful holding company needed SRF’s assistance to recover from the post-9/11 economic down-turn.

In January 2004, IPH management was concerned that start-up losses and growing accounts payable would come to restrict operations and limit the company’s ability to grow. Unpaid vendors grew impatient, and the company found it difficult to make accurate projections and promises to creditors. While strong business leaders may have an intuitive sense that they can make it work, the challenge is to find the foundation on which to move forward and regain the confidence of lenders, customers, and vendors. Management engaged Strategic Rail Finance to coordinate efforts to stabilize and refinance the entirety of the IPH operation.

SRF APPROACH

Strategic Rail Finance evaluated all company assets, operations, expenses, revenues, cash flows, and creditor agreements. SRF then built an accounting system for the company to manage the financial life of the company. This allowed company president, Ed Ellis, to focus on business development. SRF assisted IPH in implementing a new financing plan.

RESULTS

• Identified $360,000 in annual overhead expense savings
• Facilitated $2.0 million in new business development
• Refinanced $2.5 million of existing debt
• Secured $8.1 million in new financing for two rail line acquisitions