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Case Study: A Supplier of Telecommunications Equipment / Technology

Wind-down & Liquidation, Creditor and vendor management Services

Company: A publicly held start-up involved in the design, development and supply of equipment and systems to the telecommunications industry.

Situation / Tasks Performed: Since its inception in January 1994 through May 1997, the company's activities were focused on the design, development, assembly and distribution of a single and innovative product line to the cellular phone services industry. This product line began to generate significant revenues in 1998. By 2001, however, the company's losses exceeded $200 million. In addition, sales and marketing were negatively impacted in 2001 by a downturn in the telecommunications industry. Management and the Board of Directors anticipated that under existing market and operating conditions, the company would run out of cash before a restructuring and turnaround could be implemented.

TRG was engaged to assist management in the design and implementation of a vendor management program aimed at preserving cash. Shortly after TRG was hired, the CEO was replaced and management successfully implemented a re-engineering plan to further conserve cash through operating and other expense reductions.

Results: TRG moved quickly to assist management with vendor relations. The vendor management program successfully convinced a majority of creditors that it was in their best interest to postpone a significant part of their balances to help the company conserve several millions of dollars (about 50% of the total due) needed to continue operations during a period of time critical to the survival of the company as a going concern. After a successful settlement with vendors, the company is once again focusing on operations rather than its financial condition. It is investing in R&D and has signed its first sales contract since the post-telecom free-fall in 2001.

Nature of Assignment:
Primary: Wind-down & Liquidation
Secondary: Creditor and vendor management Services

Industry: Technology