Case Studies

Turnaround Secures Lender Amendment

J.S. Held Acquires Clark Seif Clark, Strengthening West Coast Capabilities for Environmental Claims, Disputes, and Catastrophe Response

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The Situation

Development of seamless pressure vessels for the storage and transportation of gases and munitions. $30 million in sales. $11 million debt. Specialize in very large, high-pressure, seamless steel pressure vessels designed to contain high–pressure compressed gases over a wide range of temperatures. 

  • Declining revenue was impacted by the relocation of electronic production to the Far East and major reductions in DOD spending.
  • Significant fixed costs are tied to a large and underutilized aged facility and workforce.
  • Earnings were impacted as the Company was saddled with significant debt service.
  • The India-based parent Company was no longer willing to provide additional capital funding.
  • Sales for the projected fiscal year are expected to decline +20% from traditional levels.
  • Existing fixed infrastructure, coupled with a traditional workforce and legacy systems, placed significant pressure on a cost basis.
  • Significant capital tied to Raw Materials, WIP, and discontinued inventory.
  • Senior Lender requiring independent assessment and corrective action recommendations prior to agreeing to provide additional capital and/or covenant relief.
     

How We Advised

  • Created an integrated functional structure that leverages resources and maximizes productivity and efficiency.
  • Created a culture of proactive sales management and customer interaction.
  • Created realistic budgets based on activity-based costing.
  • Hired a dedicated product development manager to develop and expand new products for the expanding natural gas (CNG) market.
  • Addressed inventory costs by aggressive offshore sourcing, standardization, and reduction of discontinued SKUs.
  • Implemented functional structure across the organization.
  • The Company implemented an ERP system that impacted finance and sales reporting.
  • The Company created and funded an independent Beta Plastic Composite manufacturing to address the natural gas (CNG) market.
  • Restructured sales and marketing to target the traditional core business.
  • Secured offshore sourcing for raw materials, reducing acquisition costs by +20%.
  • Secured major contracts with traditional industrial customers and the DOD, resulting in the Company returning to profitability.
  • Senior Lender and Company agree on a Forbearance Agreement that addresses rates, restructuring, fees, and covenants moving forward.

Key Contact

Dan F. Dooley, CTP 
Senior Managing Director 
Strategic Advisory Practice 
+1 603 660 8952 
[email protected] 

Related Practice Areas

> Turnaround and Restructuring Services 
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation. 

 

> Solutions for Distressed Situations 
We deliver integrated solutions for distressed and insolvent businesses that maximize recovery, mitigate risk, and restore enterprise value. Our experts are retained to help distressed organizations stabilize operations, protect stakeholder interests, and execute turnaround strategies. We take an operationally-focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. 

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