In 2006 and 2007, a private, management-owned enterprise and one of the largest general industrial construction companies in the United States was adversely affected by a number of joint venture projects involving the construction of ethanol plants. By late 2007, the losses on the ethanol projects was having a severe adverse impact on the company’s overall liquidity and contributed to several covenant violations relating to the Company’s working capital financing facility.
The lender suggested the company seek assistance. Once engaged, William Murphy lead the team with the efforts to identify and assist in the implementation of self-help working capital improvement measures that immediately stabilized liquidity and averted a potentially disastrous and value depleting Chapter 11 filing.
The Company was highly diversified and was ranked among the top 15 construction companies in a number of industrial market segments. Recognizing the company’s strengths, a cash flow forecast and business plan developed under our leadership over the next several weeks contributed significantly to re-establishing lender confidence and was the groundwork for a forbearance agreement and amended credit agreement that provided the company with time to resolve its operational challenges.
Over the succeeding months, we assisted the company with expanded liquidity enhancement activities, periodic Lender reporting, business plan presentations with sureties, major creditors and auditors, operational monitoring and the evaluation and pursuit of various capital infusion, transaction and strategic opportunities and alternatives.
The engagement with the company concluded in December 2008 with the closing of a sale and merger transaction. The outcome of the transaction was a full satisfaction of all outstanding obligations with a substantial recovery to the founders and other equity holders of this substantial, industry-leading company.