International Telecommunications

Strategic review | Cash flow management | Refinance

Vantage Performance acted as the Chief Restructuring Officer (CRO) for this project.

A telecommunications group calls for help and turns around a loss of $3 million.

A telecommunications group with operations in the UK and Australia became a victim of its own success. Its Australian operations experienced revenue growth from $15 million to $55 million in 12 months; but saw its previously healthy and profitable margins quickly eroded.

Management had rightly identified a looming and significant increase in industry investment in infrastructure so in order to capitalize on this growth moved into construction to complement its advisory and design services. Unfortunately, management 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. $3.5 million. 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, Vantage Performance conducted a strategic review to assess its strategic options and developed a 100-day stabilisation plan.

“The first thing we did was work alongside the CFO and put together a short-term, 100-day plan. We implemented a robust 13-week cash flow process, commenced regular meetings with the executive team, weekly project management meetings, and insisted on weekly financial reporting to ensure the working capital initiatives we had developed were working” Project Leader, Michael Fingland said.

“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 reassure stakeholders with whom we regularly communicated.”

The work force was downsized to align with its revenue base, key contract terms were re-negotiated on the loss making contracts to improve earnings and cash flow. Vantage Performance 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 has settled down and returned to profit. Now with a strong base management are investigating options to take advantage of industry conditions.

“We are particularly pleased with the outcome as creditors would have received very little if the group had collapsed, and in the process we managed to save some 250 jobs and the personal wealth of the founders.”

Michael Fingland

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Michael Fingland

My philosophy is that there is always a way to solve a crisis, as long as you’re engaged early enough.

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Andrew Birch

I believe that clear strategies and organisational alignment are fundamental for long-term business viability.