Case Studies

Testimonial

"While we were very excited about the opportunity to partner with MRG’s management team, we were concerned about the ability to obtain financing given the volatile credit markets. CapitalSource worked with us to creatively structure an alternative with the incumbent lending group so that we did not need to pursue new financing sources. The team’s pragmatic, solution-oriented approach helped us complete the transaction in a timely manner. Their in-depth understanding of the retail industry and MRG’s unique value proposition as well as their ability to effectively manage the bank group was of great value and will be an important resource as we continue to work with the company in the coming years."

Cory D. Mims, Managing Director
ICV Capital Partners, LLC

The Borrower

Marshall Retail Group is the leading specialty retailer of logo, souvenir, sundry, and apparel products to the casino/resort marketplace. They operate approximately 70 units in key casino markets such as Las Vegas, representing approximately 67% of their store base; Atlantic City, representing 25% of their store base; Tunica, MS; and Laughlin, NV.

Since its inception in 1955, Marshall Retail Group has employed a unique business model leveraging deep relationships with casino operators to secure highly desirable retail locations. This advantage, in conjunction with their in-depth understanding of the casino and tourist consumer, has resulted in superior sales per square foot and four-wall cash flow metrics, delivering significant income to their landlords—the casino/hotel operators.

The Industry

Together, Nevada and Atlantic City account for over 30% of the overall gaming market (estimated at $18 billion). And, as the single largest gaming market in the U.S., Las Vegas accounts for approximately 18% of the overall market. The key metric for Marshall Retail Group’s business is non-gaming visitor spending. In 2007, approximately 39 million people visited Las Vegas. While gaming revenue increased 2.3%, visitors spent approximately $115 per person on shopping alone.

The Challenge

Acting as the co-agent on a $77.0 million senior credit facility in April of 2007, CapitalSource assisted Bruckmann, Rosser and Sherrill (BRS) with a balance sheet recapitalization in order to reduce the overall cost of capital incurred during the initial purchase of Marshall Retail Group in March 2005.

This facility consisted of a $10 million revolver, $52 million term loan A, and a $15 million term loan B.

In the summer of 2008, seeking a liquidity event, BRS decided to sell Marshall Retail Group to ICV Capital Partners, LLC. ICV needed a financial partner with expertise in the retail industry, existing relationships with the current parties, and the ability to negotiate the transaction in spite of the volatile credit market.

The Solution

ICV approached CapitalSource, and together they determined the best course of action was to continue working with the existing lender group in order to maintain the current facility and credit documents. Familiarity with the intricacies of the transactions, as well as the parties involved, allowed CapitalSource to successfully solicit support from other lender parties, negotiate to amend the change of control definition with the credit agreement, and maintain favorable structure and deal terms for ICV during their purchase of Marshall Retail Group. The transaction closed in September of 2008.

CASE STUDY WRITTEN: 11/08


Header photo credit: ( c ) 2008, The Washington Post. Photograph by Nikki Kahn. Reprinted with Permission.