Monitor files bankruptcy; Deloitte Consulting submits bid for assets

By Caroline Salls

Pittsburgh, Nov. 8 - Monitor Co. Group LP filed Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the District of Delaware after reaching an asset purchase agreement with Deloitte Consulting LLP, according to a company news release.

Under the asset purchase agreement, Deloitte Consulting will acquire Monitor's U.S. practice, and practices outside the United States will be acquired by other member firms of Deloitte Touche Tohmatsu Ltd.

Deloitte's stalking horse bid includes a base purchase price of $116.2 million, plus assumption of specified liabilities and payment of cure costs.

The base purchase price is subject to an accounts receivable adjustment related to the company's U.S. business and a net asset value adjustment related to acquired companies.

Upon closing of the transaction, Monitor's and Deloitte's strategy consulting practices will combine to forge a new global presence in the industry, bolstered by Deloitte's leadership and reputation globally, the release said.

According to the sale procedures motion filed with the court, competing bids will be due by 4 p.m. ET on Nov. 26 and must be at least equal to the value of the stalking horse bid, plus $4 million in stalking horse protections and a $2 million initial overbid amount.

An auction will be held on Nov. 28, if necessary.

Combination benefits

Monitor said the combination will create a confirmed leader in strategy consultancy, one of the largest life sciences strategy practices, one of the largest marketing strategy practices and a broad-reaching innovation strategy and execution practice.

"Monitor has built a unique brand in the field of strategy consulting over 30 years, renowned for highly customized client solutions and world class intellectual property and thought leadership," Monitor president Bansi Nagji said in the release.

"The opportunity to marry these qualities with the extraordinary strengths of Deloitte, and to invest together to serve our clients' rapidly evolving needs, is hugely motivating."

Michael Canning, national managing director of Deloitte Consulting's strategy and operations practice, said in the release, "The combination of practices with Monitor's will further accelerate Deloitte's growth in the strategy space and what we develop together will reshape our industry."

As a pure-play strategy consultant, Monitor said it was facing increasing financial pressure as a stand-alone business.

In addition, the company said the recent economic downturn drove Monitor to evaluate its strategic options and determine that Deloitte was not only the right strategic match, but also provided the opportunity for substantial short-term and long-term growth and opportunities for its employees and clients.

DIP financing

In conjunction with the bankruptcy filing, Monitor has obtained a commitment for $27.72 million in debtor-in-possession financing.

Bank of America, NA is the administrative and collateral agent.

The DIP loan consists of a $15 million revolving credit facility and a $12.72 million letter-of-credit facility.

The DIP facility will mature on the earliest of 70 days after the bankruptcy filing date, 30 days after the filing date if the court has not entered an order approving the sale procedures, closing of the sale of substantially all assets and acceleration of any of the DIP loans.

Interest will be Base rate plus 425 basis points.

Debt details

According to court documents, Monitor had $202 million in total assets and $200 million of total debt as of June 30.

The company's largest unsecured creditors are

• RBS Citizens, NA of Providence, R.I., with a $4.26 million unsecured notes claim;

• Realty Associates Iowa Corp. of Dallas, with a $1.6 million rent claim; and

• Integreon of Chicago, with a $1.07 million trade claim.

The company is represented by Pepper Hamilton LLP.

Monitor is a Cambridge, Mass.-based strategy consulting firm. Its Chapter 11 case number is 12-13042.

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