£35m contract manufacturer underperforming with increasing challenges in it’s Bank relationship.
Background
Introduced as a Consultant into business by the Chair who I had worked with at the Pharma business. Business was underperforming against plan having recently acquired a new company and manufacturing site out of Administration.
Covenant reset discussions were already in place and an IBR recently completed reported no red flags. Desktop research prior to work on site indicated a worsening position with a critical cash position, heavily stretched creditor position and overly optimistic short term projections.
Key Challenges
Cashflows were compiled and presented in a manner that lacked consistency as such and could be read in an overly optimistic manner.
Sales and Profit Forecasts appeared optimistic, apparently driven by a “need” to deliver to the plan as opposed to an objective assessment of reality.
Executive team were under utilised and excluded from core decision making with CEO and CFO handling most issues.
CFO had ventured/been pushed into areas beyond their remit that meant Finance function and output did not have necessary focus.
Two separate cultures existed owing to recent the recent acquisition and a lack of integration.
There was a clear need for additional financing within next 8-13 weeks.
Essential to rapidly establish credible reporting pack for Bank and Board on business status and requirements.
Main Actions
Liaised with Bank and their advisers on options for business once additional support had been declined.
Oversight of cash flows and projections.
Eventual refinance offer combined with consensual shareholding restructure and shareholder investment was the preferred option for all parties.
Post Refi supported Chair for a period on an Ad Hoc basis with ongoing challenges driven by COVID.
Main Results & Achievements
Refi completed at end of April despite COVID 19.
Re-established trust and credibility with the Bank – which while it did not result in refinancing offer did result in ongoing support and eventual restructuring of outstanding Term Debt and Mortgage.
Cashflow management processes and reporting changed significantly, providing greater visibility and clarity.
AMA process was delivered within incredibly tight deadlines.
Successful Balance sheet restructuring provided a much better presentation of the Company’s financial standing.
ABL refinance package was achieved during the peak of COVID.