Rebuilding a quarry business after severe flooding resulting in a $25M equity raise.
A mining services business in Central Qld had grown very quickly and was experiencing tight cash flow as a result. To add to this, heavy rainfall had caused widespread flooding throughout the region resulting in a 3 month closure of their 12 quarries resulting in a $3 million loss for the year and severe cash flow issues.
To stay in business, the company needed an immediate working capital injection of $3.5 million. However, its major financier was not prepared to lend further funds and was considering placing the company into receivership.
The Managing Director had already committed to payment plans which could not be achieved causing significant distress to its creditors and the staff.
How we turned things around.
Our first priority was to conduct a review of their strategic options whilst we implemented a crisis management and business stabilisation plan.
We introduced robust cash flow management, negotiated a standstill agreement with their major financier and assisted with implementing revised payment plans with their major creditors.
To help the company’s short-term cash flow we implemented a staggered stand-down of 80% of their staff for two months and obtained approval from the major financier to allow secured assets to be sold and used for working capital.
With these measures in place a revenue growth strategy was developed to capitalise on industry growth and attract private equity interest.
With the short term position stabilised we assisted in securing a private equity injection of $25 million saving the business and securing the jobs of 75 employees. This allowed for all bank debt totaling $12 million to be repaid and to fund future growth.
In the following 18 months the business grew from $15 million to $60 million in turnover.