The Situation

With Poorly Managed Debt Financing Threatening Viability, Asia Bio Systems Required Urgent Restructuring

  • Asia Bio Systems (Thailand) Co., Ltd. was the pioneer in bringing the concept of outsourced biomedical engineering services to Thailand in the mid-1990s.
  • The company had grown steadily, if slowly, as it attempted to expand its services in a market that was unfamiliar with outsourcing of technical support services.
  • In an effort to accelerate growth, the company’s then managing director obtained short-term financing by factoring a significant portion of the company’s receivables to invest in sales and marketing activities.
  • Thailand’s factoring regulations require repayment of the factored receivables within 90 days. When new revenues did not materialize, the factor demanded repayment and notified the company its assets, pledged as collateral, would be seized.

The Project

Find an Angel investor to provide a combination of critical short-term debt financing; form a new legal entity with a clean balance sheet and; provide interim operational management support to the company during the restructuring.

  • As a small foreign-owned company in Thailand with limited physical assets, Asia Bio Systems had very few options for obtaining typical bank financing to restructure its debt.
  • Tractus accessed its network of business contacts and identified an Angel investor with an interest in investing in the healthcare sector, to provide short-term debt financing and equity to purchase the assets of the company and restructure it.
  • In parallel, negotiations were undertaken with the factor to extend the terms of repayment for as long as legally possible while the short-term debt financing was obtained from the Angel investor.
  • The short-term debt financing was structured with the Angel investor using the company’s assets as collateral.

The Solution

High cost factoring financing was restructured and a new Angel investor was brought in to acquire the assets of the company and form a new legal entity with a clean balance sheet

  • High cost and high risk factoring financing was repaid with short-term debt provided by an Angel investor.
  • The assets and business of the firm were used to repay the short-term debt and rolled into the new legal entity formed by the Angel investor.
  • Existing management and employees were retained by the new firm to ensure service continuity to existing customers.
  • Tractus provided interim management to oversee the restructuring and on-going management at the request of the Angel investor after the previous managing director was terminated.
  • The new legal entity, with a clean balance sheet, and Asia Bio Systems’ book of business was well positioned for future growth.