Case Study

Background

Mobile phone distributor and logistics company
Listed company with sales of $600m p.a.
Multi-site business, 500 employees
Loss of $30m (profit of $15m in previous year)
Bank finance $72m (strained relationship)


Key issues

Risk of short term facility breaches
Management’s corporate strategy flawed
P&L and cash flow forecasts too optimistic
Key business drivers and risks identified
Poor management of cash flow and working capital
Restoration of bank relationship essential
Significant profit and cash generation opportunities
Viability of business is questionable in current form
Several non-core businesses not adding value
Equity injection required


3 Phases

Assess short-term cash and financing needs
Viability review and develop turnaround plan
Implement & monitor turnaround strategy


Outcome

Managed to avoid a likely collapse
Some non-core businesses sold or closed
Significant reductions in cost base
Significant working capital improvements
Bank debt down to $12m ($60M improvement)
Bank relationship restored
Successful rights issue of $3m
Revised budgeted EBIT of $3m (ie. $33M turnaround)

For further information contact Vantage Performance on (07) 3229 5750, or visit us on http://www.vantageperformance.com.au/

Vantage Performance
Turnaround Management Specialist

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