Vantage Performance acted as the Chief Restructuring Officer (CRO) for this project.
Rapid growth exposes $100M group to industry downturn
A national group operating in the electrical construction and facilities management industries had grown from $2 million to $97M in just 8 years. Unfortunately this growth came at a heavy cost.
The company’s growth was party organic but also involved the acquisition of three businesses utilising a combination of debt and equity. When the industry took a downturn the company faced a $22M decline in revenue resulting in losses of $5M.
As a result, the business had breached its banking facilities and had an immediate working capital requirement of $3M. To make matters worse it’s bank debt equated to 8 times EBITDA.
This period of extreme growth followed by rapid decline had placed extreme pressure on the board and its management team.
How we turned things around.
Our first step was to conduct a strategic review of the group to assess their options whilst implementing a crisis management and stabilisation plan. An aggressive working capital management plan was executed which improved cash flow by $5.1M in the first 100 days.
We then developed a comprehensive 2 year turnaround plan and assisted with its execution. Loss making contracts were exited, operating costs were reduced, $10M in creditor payment plans were secured and an agreement was reached with a major creditor to write off $4M of their debt. We also secured a $4M working capital facility to enable the partial refinance of the lead financier.
After a successful implementation of the turnaround plan we project managed a full refinance of the lead financiers’ facilities to the value of $17M, 6 months ahead of plan.
The group’s revenue increased from $75M to $100M, earnings improved by $5.2M and enterprise value increased by $20M. An extremely pleasing result as we also saved some 350 jobs.
Our work with this company received the Turnaround Management Association “Turnaround of the Year Award”, Large Company category.
The group has continued to grow and the directors are really enjoying their business once more.
I want you to know how personally grateful I am for what you did for us. I will never forget it.