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Company
A family-owned manufacturer of branded hosiery products marketed to mass merchandisers and big-box retailers with revenues of $70 million.

Services Provided
Turnaround and Crisis Management, Debt Refinancing

Situation
The strategic plan developed by the management team to increase U.S.-based manufacturing capacity increased overhead costs to such an extent that cash flow could no longer support the burden. Increased sales did little more than exacerbate the problem as customers exerted downward pressure on the selling prices of the company's products. The company was in a significant over-advance position on its line of credit facility and operations were cash flow negative. The company could not meet payroll for the following week and faced immediate liquidation.

Our Role
We immediately negotiated a forbearance agreement with the lender and secured emergency funds to cover payroll. Initially brought in as CRO and interim CFO we implemented cost reductions, reduced SKUs, implemented new management tools and incentive packages, managed trade vendors and daily cash requirements. Once the initial crisis was averted, we recruited a new management team and moved to a role as advisor to the CEO. We then developed a new strategic plan with management to move the company from a manufacturer to an importing, logistics and brand management company. Finally, we took the lead in refinancing all credit facilities totaling over $20 million.

Result
Our quick response to the crisis provided the necessary time to restructure the company and allowed management to regain credibility with its creditors. The company turned cash-positive within forty-five (45) days of our arrival and remained so throughout the assignment. Controls implemented by us during the first forty-five (45) days remain in place and are the foundation for the current management team. An advisory board was formed and meets on a quarterly basis. By the end of the first year the company had turned a multimillion dollar loss into a million dollar profit.

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