Putting together a restructuring and re-capitalization program

The Challenge

An industry conglomerate had recently acquired an insolvent steel processing company. The market environment was challenging due to high levels of overcapacity; therefore the steel processing company could not improve its operating and financial situation. It was facing tremendous liquidity issues, while at the same time government subsidies for a significant part of its employees were due for renegotiation.

Our team helped the conglomerate to review the short-term liquidity situation of their acquisition and potential strategic and operational measures to turn around the business. We developed a viable business case for the shareholders, potential investors, and to support the upcoming government negotiations.

Our Breakthrough

Throughout the two-month project, we set up a weekly liquidity forecast. This tracked and clarified any shortfalls depending on different production levels and identified short-term liquidity levers.

The project team also conducted an extensive market analysis to evaluate future revenue pools and developed and action plan for productivity improvements and capacity right-sizing.

Finally, we developed a comprehensive integrated financial model to look at the economic feasibility and financing needs for the new business model.

Our Impact

Putting a weekly liquidity forecasting tool in place helped the company avoid an imminent liquidity crunch and prepare the necessary financing measures on time.

The business case we formulated helped the client to convince the government about their long-term commitment to a solid strategic growth plan and engage in discussions with potential strategic investors.