Case Study: Second Tier Defense Contractor
Company: Manufacturer and designer of pyrotechnic
devices used in an array of complex applications for the defense and missile
industries.
Situation/ Tasks Performed: In early 2002 TRG was
engaged by the Company after being recommended to the Company by the Agent
for a large group Lenders. The Lenders had lost confidence in the Company
after missing their forecasts and planned cash generation. TRG was engaged
to perform a variety of analyses on the Company’s revenue sources,
business plan and cash needs.
TRG quickly came to the conclusion that the Company was facing an impending
liquidity crisis, which the Company was unprepared to address. After careful
analysis and consideration of the facts the Company became convinced TRG
was correct. TRG then developed a two-step process, the first step was
to deal with near term liquidity issues, and the second step was to fix
the capital structure through the sale of a major subsidiary of the business.
TRG and the Company calmed the Lenders initial concerns by quantifying
the problem then identifying steps to eliminate the near term liquidity
issues. TRG assisted the Company in developing a dynamic cash monitoring
process with an active vendor management program. TRG helped management
identify ways to conserve cash and reduce working capital requirements.
Results: TRG then assisted the Company in negotiations
with the senior secured lenders, the sub debt holders and equity sponsor
that ultimately resulted in significant debt reduction through the sale
of a major subsidiary while preserving equity’s opportunity on its
investment.
Nature of Assignment:
Primary: Turnaround
Management
Industry: Manufacturing
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