Vantage Performance acted as the Chief Restructuring Officer (CRO) for this project.
A national telecommunications group calls for help to turn around a $3M loss.
A national telecommunications group became a victim of its own success. Its experienced revenue growth from $15 million to $55 million in 12 months but saw its previously healthy and profitable margins quickly eroded.
Management had identified a looming and significant increase in industry investment in infrastructure so in order to capitalise on this growth they moved into construction to compliment its existing advisory and design services. Unfortunately, the group lacked the necessary people, systems, controls or the right funding structure to manage this growth.
For the first time in its history, the company made a loss – and this triggered a series of events which put the company and its stakeholders under extreme pressure.
Identifying the issues
At the time these issues were coming to a head the company’s CFO was nearing retirement and without sufficient skills to manage the financial crisis. There was inadequate project management and some projects were loss making. The company’s project management and accounting systems didn’t align and there was an immediate need for a working capital injection of approx. $3.5M. Naturally under these difficult circumstances staff morale had plummeted to an all-time low.
How we turned things around.
To tackle the company’s immediate challenges we conducted a strategic review to assess the groups options and developed a 100-day stabilisation plan.
We implemented a robust 13-week cash flow process, commenced weekly meetings with the executive team, project managed the 100 day plan and implemented a weekly financial reporting process to ensure the working capital initiatives we had developed were working.
Given the seriousness of the situation we took a very aggressive approach to managing working capital and assisted with negotiating creditor payment plans and a standstill agreement with its lead financiers. This helped us to reassure stakeholders with whom we regularly communicated.
The work force was downsized to align with its revenue base, key customer contract terms were re-negotiated to improve earnings and cash flow. We also project managed a 2-stage refinancing plan which resulted in both major financiers being refinanced providing a more suitable and flexible finance structure.
The business settled down and returned to profit. Now with a strong base management are investigating options to take advantage of industry conditions.