Business

Vaughan Foods, Inc., which is based in Moore, Okla., prepares refrigerated chicken, tuna, bean, and pasta salads, as well as fresh-cut salad and salad mixes. At least three times a week, Vaughan Foods distributes its products to clients across twelve states in the Midwest, Southeast and Southwest. Among its customers are restaurants, grocery store delis and food service businesses. The Company makes some seventy different salad products and processes 1-2 million pounds of salad each week.

Client Objective

Expansion of the business through its affiliate Allison’s Gourmet Kitchens, combined with declining gross margins in its base business, resulted in negative cash flow and severe liquidity constraints. As a result, the Company defaulted on its senior debt and its lender engaged White Oak Group as financial advisor to explore strategic alternatives to finance the Company’s operations.

Results

With the completion of an initial public offering led by a regional investment bank, Vaughan Foods raised $14 million through the sale of common shares and warrants (Nasdaq:FOODU). Proceeds were used to satisfy its senior debt obligations and to fund operations. The Company’s senior lender fully recovered its defaulted principal, interest and fees and was paid out at the closing of the offering. White Oak Group assisted various Company constituencies in coordinating their security interests, and facilitated a process which resulted in a capital infusion to expand the business and address senior lender objectives.

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