Ozark River Bank Information for General Managers By Courtney Shelton Hunt” Background ‘Two years ago, the Ozatk River Bank, the largest ‘commercial bank in a six-sate ara, became a major lender in-an employeedod leveraged buyout. To finance the buyout, the employees pledged the assets ‘of the company as collateral for their loans. Now it thas become clear that the business plan on which the ‘buyout was based is not meeting projections, Although the new awners have been able 16 turn the ‘company around from a losing situation to oe thats marginally profitable, itis unlikely that cash flow willbe sificient to meet debtsericerequitements When & lage sue of zero-coupon bonds matures in about eighteen months ‘The original employee buyout was a highly publicized event in which more than a thousand jobs Were saved, financial disaster fora community was avericd, and the bank was hailed for its assistance ‘and support. To let the company go under because it is unable to met its financial obligations om the loans would throw the community into a severe recession, increase jblessess, and pot the bank ina bad light “Therefore, the bank needs to explores creative plan for the workout in which the various lenders, including @ group of other financial institutions tat hold unsecured debt (debenture), and the stockhoiders (both management and the employees) farrange a restructuring at would rooce debt service requirements consistent with curent cash- flow projections. This could involve a variety of Aechnigues, including the conversion of some debi imo equity, salary reductions for management, and ‘efficiency cut inthe work fore. Dealing with this kind of situation is sensitiv, highly stressful, and severely time constrained. You have fund that the most succesful approach to doing this kind of work i to assign i toa project team. The job of the team will be f0 put together a restructuring pape rm an ars by Jet Waiters plan that moots the noods of the ak and the other Tenders and that can be put into place quickly at the time of default Five people in your department have the knowledge and ability to-do the Kind of work necessary. Your job isto decie which thre wil work bes together accomplish the stated objectives, The success ofthis team will be important ts members carer paths land” to yours, The following people in your ‘epartment are available: Harold, age $2 Harold has been loyal employce of the bank for twenty-six years He is respecte by his pers and his ‘superiors, and he has a solid understanding of the industy "involved In oddition, he has worked ‘succesfully on smaller but similar projets, Herold ‘et corel time lines for work on projec and Duses the members of his teams to be fastidious fbout_meeting, deadlines. Over the years, be his ‘proven himset to be both leader and team player Recenily, Harold returned to the bank after six ‘month medical leave of absence because ofa hear fatuck, He i anxious to gct back into werk and is ‘actively looking for something odo. oan, age 41 Joan isa detail person. She understands the fine points of leveraged bayouts and reoreahizations beter than anyone in yout department, and when she isom a team it is rare fr thee tobe any loopholes of tlthes in the final results Through hand work and ‘determination, Joan as sen sn the company fry ‘quickly. She is an outspoken feminist whose sexual Iharassment case against tho bank, brought seven ‘months ago a5 a feation toa situation with @ prior ‘project tam, has sill nt heen resolved. Apparently, the tvo men ith whom she had been working used ‘reat dal of locke-room language, persisting inthis practice despite her objections. The previous manager ‘© 20062008 Dispute Reston Research Center, Northwestern Univeray Alsighis reserved. {Rg soe reson Remar Ca 350 per parson usage fe or each of ts exer, nctung ‘noe mats e DRA in 0 ae Ayes ha ourtnn and ogres Payer ‘Gites andnoabn cl ccprtton wich moses Sry aoe canaan oma OFC, Keto School ot Management "Tet 8449-008, Px 47407-5700, erewesten Unversty 2007 Sharan Road Evanson, tina 60208-2001 Gregietogg nemesten eS: nw teloggrachwesten eureof your department, your immediate predecessor, failed to take her complaints to him seriously Cynthia, age 31 Cynthia is married and has two young children. She came to work in your department five and a half ‘months ago, just after receiving her MBA, and is still Teaming the ropes. Her job prior to and during her MBA program was as a project manager with the company that is now the object of the workout, She was there throughout the leveraged buyout proceedings and had been part of the group that developed the original business plan. You had hired Cynthia to replace Harold, whom you hadn't expected 10 return; however, some people also believe that she was hired specifically to undereut the credibility of Joan's ease, For the last three months, Cynthia and Joan have been working together on a plan for an on-site day care program at the bank Jack, age 35 Jack is a bachelor who likes to spend his free time ‘ith his friends at sporting events or ata local bar. Of all of the people in your department, Jack is probably the most knowledgeable about workouts on complex loan defaults. He has an excellent reputation for being innovative, but he is also known to be a procrastinator—one of those people who likes to push deadlines, waiting until the last minute before he really gets going Then, Jack works virtually around the clock, pushing his coworkers to do the same, In the end, he always seems to come through, Joshua, age 62 Joshua has an air of Old World chivalry and is v conservative about women, He has been outspoken his belief that women belong at home taking care of their husbands and children, but he makes his comments with such charm that most people don’t take offense. Having been at the bank for more than thirty years, and being an active member in the local community, Joshua knows just about everyone and has ready access to a wide range of resources, He knows how to work the system to get what he needs when he needs it This kind of networking ability could prove to be an important factor in the ultimate success of this project. ‘The Problem It’s important thatthe three people you select for this, team work well together and produce a successful workout plan. They must accomplish the task accurately, quickly, and without delay