Crisis Management Rejuvenates High-End Manufacturer, Positions Company for Sale

How Platinum avoided a shutdown and quickly improved the business.

Situation

A manufacturer of premium restaurant fixtures, suffering a liquidity crisis due to a combination of unprofitable operations and lender fatigue, was poised to shut down operations and lay off approximately 200 employees. The owner retained Platinum to quickly identify and implement an alternate, go-forward strategy.

Challenges

  • The lender had declared a default, causing the company to seek a replacement credit facility which impaired its cash flow.
  • The new credit facility was split between two lenders, one lending against receivables, the other inventory.
  • The inventory lender changed the lending parameters immediately after the loan closed and began aggressively disgorging the company of much needed cash.
  • Prior to Platinum’s engagement, the company had communicated its intent to cease operations to its employees.
  • Vendors had stopped shipping product, causing a substantial increase in backlog and impairing the cash flow of the company.
  • Key employees were preparing to leave the company; morale was at an all-time low.

Response

On Day 1, Platinum conducted a quick assessment and identified immediate areas of improvement to manage the liquidity crisis and get operations back on track.

Key vendors were contacted and asked to deliver products on a cash basis. Critical products needed to complete orders were received and the process of harvesting a $1.50mm backlog was begun. The senior secured lenders were contacted and asked to support the company and relax their lending parameters. After assurance that there was adequate collateral to support their loan positions, certain key concessions were made. Cash velocity for the business was accelerated dramatically, a critical first step in this turnaround.

Results

Products were delivered to complete projects that had been in limbo. The company’s stature in the marketplace was preserved and new orders began to arrive. Reestablished in the marketplace, a competitor made an offer to purchase the company. Platinum led a sale process and the business continues today under new ownership. The shutdown was avoided, very few jobs were lost and the owner was pleased with the strategic sale.

Download

Announcements

Subscribe to newsletters, announcements and updates from the Platinum Group.