Vantage Performance acted as the Chief Restructuring Officer (CRO) for this project.
50 year old Asia Pacific business over exposes costing $20M.
A group operating throughout the Asia Pacific region turning over $107M p.a. had been operating successfully for 50+ years. Due to a downturn in its Australian markets, and in an effort to avoid downsizing the business, management decided to tender for 3 sizeable projects at very skinny margins also requiring the group to hire a number of new “untested” supervisors and tradesmen. This decision cost the group dearly as the inexperienced site supervisors and tradesmen mismanaged the 3 new projects resulting in losses on these 3 contracts of circa $20M.
As a result the group made a net loss of $10M for FY16.
The business had breached its $32M in banking facilities and had an immediate working capital requirement of $7M.
How we turned things around.
Our first step was to conduct a strategic review of the group to assess their options whilst implementing a business stabilisation plan. We developed an initial working capital plan comprising some 64 initiatives totalling $54M which covered the immediate working capital requirement of $7M plus the forecast cost to complete the loss making contracts.
Following our strategic options review the decision was taken to sell/exit the loss making construction contracts in Australia, sell one of the overseas businesses, sell 2 properties and surplus items of plant and equipment to pay down bank debt and meet the working capital shortfall.
We negotiated a standstill agreement with the major financiers along with a 4 month equipment finance holiday and assisted the CFO in negotiating an ATO plan, Payroll Tax plan and a range of creditor payment plans.
The restructure and turnaround plan was successful and the group has just reported a profit of $8M for FY17, an $18M turnaround in 15 months.
A very pleasing result as we were able to save $30M in equity for the family and 250 jobs.