Bondholder Committee / United Sports Organization of Barrington

Expertise

Business Feasibility, Forensic Accounting, Interim Management, Bondholder Representation

Assignment

Lake Barrington Field House (LBFH) is a state-of-the-art 175,000 square foot multi-sport and fitness complex, which is the largest in the Midwest. LBFH was established in November 2008 and is owned by United Sports Organization of Barrington (USOB), an Illinois not-for-profit corporation. The company was almost entirely funded by revenue bonds totaling $28.5 million.

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LBFH was experiencing significant operational and financial stress and was in default on its $28.5 million in bonds. The company was a delinquent on its property taxes, was in litigation with its general contractor, and also had significant mechanic liens from subcontractors which forced the Bondholders and the Board to lose confidence in management as well as hire a financial advisor to assist them. MainStream was engaged by the bondholder group to help determine if the Facility was feasible, it's corresponding debt service capabilities, and perform forensic accounting, and a management review.

Actions

MainStream conducted a multi-tier process including forensic accounting, benchmarking, management review and a business feasibility study. MainStream's results had indicated:

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• Existing client contracts were at below-market rates and renegotiation was necessary for business survival.

• Numerous unsubstantiated accounting transactions were identified dated back to the construction phase of the facility.

• Overall financial and accounting controls and procedures were inadequate.

• Proposed management projections were unrealistic and unattainable and existing management needed to be replaced.

MainStream provided interim operational and financial management services for LBFH which:

• Identified and implemented numerous initiatives to increase revenues and corporate sponsorship and reduce expenses.

• Developed detailed 13-week & 26-week cash flow and projection models.

• Consistent and detailed communication with Bondholders and Board.

Results

The company successfully renegotiated below-market client contracts to market rates, terms, and conditions resulting in significant additional cash flow. The company substantially lowered operation expenses by reducing payroll to market levels, renegotiated substantially all 3rd party contracts, and replaced contracted property management company at favorable terms and seamlessly transitioned management services to new property management company. With the help from their financial advisor, the company exceeded performance expectations with interim management initiatives resulting in an increase in revenues by 12% and EBITDA by 105% compared to prior periods.