Stabilizing Company Liquidity While Building a Successful Path Forward
The Situation
The largest West Coast independent blender of oils and lubricants faced continuing liquidity shortages and was unable to meet on-going debt obligations due to a significant reduction in production volume demand and the need for additional CapEx. The Company was in default with lenders and needed support to establish a “go-forward” path. Accordion’s Performance Improvement & Restructuring Solutions team was selected to work with Management to find a solution for all stakeholders.
Services
13-Week Cash Flow Forecasting
Active Liquidity Management
Business Plan Reforecasting
The Execution
- Worked directly with the Company’s finance/accounting team and C-Level executives to prepare an integrated 13-week cash forecast based on forecasted sales, cash receipts, disbursements, and changes in working capital.
- Built forecast to identify liquidity risks associated with weekly variances to plan performance in relation to business profitability and working capital change.
- Identified and helped support key actions to improve availability and extend the liquidity runway.
- Established a robust, efficient collateral and liquidity reporting process with daily and weekly updates shared with the Company’s lenders.
- Maintained oversight of all cash disbursements to ensure new financing was utilized in the most effective manner, and that the Company remained in compliance with all covenants.
- Prepared and socialized potential alternatives available with Company stakeholders and their advisors to develop a consensual solution to avoid potential liquidation.
- Obtained lender forbearances and bridged financing providing additional time to execute improvement plans.
- Negotiated purchase agreement for the sale of the Company on behalf of all stakeholders with a strategic buyer and supported closing due diligence.
The Results
With Accordion’s support, the Company and other stakeholders gained visibility into near-term cash flows, which provided an objective lens and enabled all parties to better assess the state of the Company and its go-forward options. Our team helped the Company obtain additional financing and improve its liquidity runway. Additionally, the Company was able to enter into an equity purchase agreement with a strategic buyer, creating value for all stakeholders.