A $12 million manufacturer of products for the cosmetic industry.
The company was in a significant over-advance position on its line of credit. Its forbearance agreement was set to expire in 60 days. Operations were cash-flow negative. The company had a payment due on a large industrial development bond one day before the forbearance agreement expiration date. The company had recently lost one of its largest customers to foreign competition. The bank was poised to liquidate.
As CRO and interim CFO, we implemented cost reductions and structured new management tools and incentive packages. We managed trade vendors and daily cash requirements. We negotiated and implemented a payment plan with trade creditors.
A thorough review of the balance sheet yielded significant underutilized assets which were quickly sold. This allowed the company to meet its bond payment obligation. A multi-year trade creditor payment plan (no interest) generated sufficient cash inflows to allow the company to meet its obligations. The company turned cash-positive within 60 days and remained so throughout the assignment. Our quick response provided the time needed to restructure the company and allowed management to regain credibility with its creditors.
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