Management Assessment, Competitive Forces, and Projected Performance
Q: On slide 28-30 where we determine that Sequoia Properties projected 2019 cash flow deficit is $2.7MM, why is that not a stopping point for this deal? It seems like we're done with this application considering the significant negative cash flow. I also assume that we have a PFS on file and can see that Mr. Schumacher does not have the liquid assets to cover the deficit.
A: We could indeed stop at this point based on the magnitude of the projected cash flow deficit. It seems, however, that in considering a company operating amid all the complexities and the intertwined cash flow flexibilities at work in this family of companies, we might be missing some alternative sources of cash flow to correct the deficiency.
We continued to work our way through a step-by-step compilation of a global cash flow to consider every possible source of "family" cash flow under the corporate control of Mr. Schumacher. By patiently considering the global cash flow analysis with a genuine intent to uncover related party cash support, we assembled a more complete analysis. We have in turn positioned ourselves to make a more responsible credit decision based on a more complete information base that explores cash support from the guarantor and sister companies to arrive at a solution to the apparent cash flow shortfall experienced by our borrower.
Course overview: Management Assessment, Competitive Forces, and Projected Performance