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Company
A leading manufacturer of replacement turbine blades for jet
engines and other turbo machinery with revenues of $15 million.
Services Provided
Turnaround and Crisis Management,
Debt Restructuring and Refinancing
Situation
An onerous debt obligation ($15 million), rapid growth and few operational controls
left the company in a precarious position once the historically cyclical business
entered a down cycle. Losses had increased for the previous three years resulting
in a net deficit position. Cash flow could not support the debt structure.
Our Role
As CRO we reduced overhead in selected areas by consolidating administrative duties
and reducing redundant sales functions. We reduced five (5) credit lines into one (1)
facility, reduced and restructured debt through debt forgiveness negotiations with the
secured lender, negotiated and implemented a payment plan with trade creditors allowing
the reorganization to take place outside of bankruptcy proceedings, expanded overhead
rates from a single rate to multiple rates to accurately reflect product flow and costs
throughout the factory and revised pricing on all products. Once profitable and generating
cash, we assisted the company in obtaining a new financing package.
Result
By revising overhead rates and pricing, an immediate improvement
in profitability was achieved. Pricing changes, coupled with
the trade creditor plan, generated sufficient positive cash
inflows to allow the company to meet its obligations. Restructuring
of the debt allowed the company to move from a net deficit
to positive net worth position. Within six (6) months the
company was profitable.
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