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Case Studies – Our results speak for themselves

The following are a few summary examples of our past engagements:

Financial Services & Restructuring

Bankruptcy Services

Case Studies

$50m specialty auto manufacturer

The Client:

A specialty vehicle manufacturer who produces hearses and limousines for the funeral industry owned by a private equity group and asset based lender.

The Problem:

Company forced to redesign and re-launch both their key vehicle platforms stalled with issues and unable to ship vehicles. The Company was facing major quality issues and currently out of covenant on their working line of credit and the situation was quickly becoming destabilized causing to the company to lose credibility with its dealers and vendors.

The Need:

Stabilize the production environment and resolve issues creating quality concerns. Rebuild management team while installing additional financial models for the company to use to better monitor production and provide key performance indicators to management team.

The Solution:

HMG principal assumed role of CRO and interim CEO. Created turnaround plan that addressed and resolved launch issues. Reduced vehicle production hours over 30%. Revamped quality control processes and quality management. Installed more robust capacity planning models to better balance production lines and staffing. Re-habilitated management team with improved skills. Hired permanent CEO and at behest of lender and company ownership, one of our principals has assumed the role of Chairman of the Board for ongoing monitoring and management consistency.

$500m meat & protein processor

The Client:

Initially engaged by the lender who provided $80m operating revolver to a custom protein processor for mid-level restaurant chains such as Applebee's, Red Lobster, Chili's, and the military rations program. Ultimately engaged by the company when mutually agreed with lender the company needed a CRO presence.

The Problem:

The company had repeatedly missed their operating budgets and was in breach of loan covenants. Forecasts indicated the company could be facing a $2m cash shortfall within the next 90 days. Lender willing to work with company but ultimately wanted to exit loan and industry.

The Need:

Initially provide lender with cash flow analysis and operating assessment of company to see if cash over-advance could be avoided. Also, determine if business issues were “one time problem” or a symptom of bigger market issues to come. Then in the end assume CRO role to direct company through a short-term cash flow issue while the company secured a new lender.

The Solution:

Our team provided financial assessment to the lender that indicated the company did have short-term liquidity issues and market issues. However it indicated that the longer term issues could be averted by changes to internal process and management practice. The Company and lender mutually agreed the need for a CRO to direct the company through these short term issues. The original CRO choice had to step aside for personal reasons and one of our HMG principals assumed the role as CRO. Our team negotiated a short term forbearance agreement with the lender to provide the excess liquidity necessary to address short term cash needs and covenant breach issues. Our team installed management models providing insight to significant payroll abuses and purchasing process concerns. Insight and action in these areas by CRO team created improved profitability/stability allowing company to secure new credit facility.

$35m BHPH automotive retailer

The Client:

A used car retailer with a current portfolio of $11.8m of active loans and two static portfolios provided the initial receivables base when the current lender funded the opening line of credit. The situation became destabilized as the static pools incurred large amounts of charge-offs.

The Problem:

The Company was over-advanced on current line of credit, unable to present a turnaround plan to the lender and two older loans required liquidation. As a family business operating three sales locations it did not have the necessary management skills to enact a financial restructuring.

The Need:

After two professional service firms were unable to impact the cash situation, the Company needed a detailed assessment to identify the magnitude of operation and financial changes to be addressed if it was to survive.

The Solution

Our team developed cash management and business models that followed the collateral impact of each transaction through the entire business cycle. The business model gave sensitivity to each factor to better understand where to focus the Company’s management to impact financial performance. Insights gained through this model confirmed the opportunity for a financial turnaround and made it possible to more accurately project the timeline for this workout for the Company and lender.

$500m Liquor Distribution Company

The Client:

A family owned wholesale distributor operating in New York with sales of approximately $500 million, recently completed a sale of assets, acquired two additional out of state operations and had refinanced operations.

The Problem:

Operating costs had been increased disproportionately to performance over the previous two years, with additional pressure on sales and margins from new competition threatening financial performance and bank covenants.

The Need:

Restore profitability across all operating divisions and obtain increased interim funding during transition.

The Solution

Analyzed cash management and expense structures across the seven operating divisions to define cash needs identified serious shortfalls going into the key sales period. A review of the loan agreement structure and reserves resulted in recommendations and revisions being successfully negotiated with the lenders, providing increased liquidity. The turnaround plan consolidated warehouse operations, reduced shrinkage, restructured the financial and administrative functions, purchasing of inventory and management thereof, sales and budgeting resulting in improved cash flow.

$150m automotive tier1 supplier

The Client:

A leading manufacturer of automobile and light truck component parts for both original equipment manufacturers (OEM’s) and Tier 1 suppliers operating four production facilities in Ohio, Michigan and Ontario, Canada.

The Problem:

In launching $44 million of new production in different plants, the Company had run into equipment and production difficulties leading to increased operating costs generating an over-advance of $5.3 million. A recently appointed Chief Restructuring Officer had developed and missed three business forecasts in five months exacerbating lender fatigue and a financial crisis was evident.

The Need:

The Company was out of control, detailed cash management had to be instituted immediately to provide three lenders with an accurate assessment in order to obtain a financial commitment. Additionally, as a bankruptcy filing seemed imminent, none of the lenders would provide a DIP.

The Solution:

Working as financial advisors the Company’s financial position was clearly defined and production issues highlighted. Shortly thereafter, our principals’ responsibilities were increased, becoming the replacement CRO team to manage the operation in crisis. Despite improved performance and profitability, the combination of lack of working capital and lender fatigue caused the company to seek bankruptcy protection. Retained to operate the Company through the bankruptcy process, our principals managed the sale while continuing to improve the Company’s financial performance. The result was a successful sale of the Company’s four operating plants as a going concern saving 750 production jobs.

Bankruptcy Services

$200m telecom & network Services Company

The Client:

An electronics company that designs, develops, installs, manufactures and markets electronic hardware and application software products for telecommunications through a number of subsidiaries and conducts operations in Canada, Mexico, and the United Kingdom.

The Problem:

The Company had financially stalled, waiting on a series of government contacts to be approved, sales slowing, several products under development, and bank covenants threatened.

The Need:

Formulate the company restructuring activities into an official Financial Plan and renegotiate the Asset Based Loan agreement to assure that terms and condition provide the necessary working capital.

The Solution:

Our team developed a Financial Model that provided a projection of the working capital needs for the next 18 months encompassing the restructured organization. Analysis of the Terms and Conditions in the Loan Agreement identified items that could be renegotiated to provide additional liquidity without additional risk to the lender. Our principals “brokered” a new Asset Based Loan Agreement with the Lender that provided the company adequate working capital to execute their plan.