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Turnaround, Workout & Profit Improvement

Turnaround, Workout and Profit Improvement

BTG Global Advisory has significant expertise in providing strategic and operational advisory and interim management services to companies that are experiencing financial or operational difficulty or are involved in a bank workout situation.

We help companies develop and execute a turnaround strategy and focus on fundamental business practices that may have been deferred or ignored. In this area we assist management in:

  • Reducing losses
  • Controlling expenses
  • Increasing liquidity
  • Improving business processes
  • Divesting non-core businesses
  • Coordinating communications between lenders and creditors
  • Acting as a sounding board for management
  • Taking on interim management level responsibilities, including Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Treasurer and Chief Restructuring Officer
  • Improving product and customer profitability

All of our core members are regularly engaged to fill a void in a management team following a change of control in ownership, departure of a key employee or during an acquisition, sale or divestiture of a business. When a client is looking for situational expertise or specialised skills to guide it through a restructuring or to restore credibility with key stakeholders, we provide the temporary leadership and independent voice required until a permanent replacement can be found.

Related Case Studies

Automotive

Amcast Industrial Corporation

100-year-old company manufacturing components for the automotive industry. Main products were wheels and steering assemblies. Operated five plants in the US and two in Italy.

The Italian plants, operated by the Speedline subsidiary, were poorly managed and plagued by union discord with management and disputes among the six independent unions representing the workforce. These plants operated at significant losses, consuming cash to the point where the US lenders felt their loans were at risk of default. Accordingly, they cut off all US funding of the Italian operations.

In addition, the Italian banks reduced Speedline’s availability because of their losses and their exposure to Fiat, which at the time was struggling.

Implemented weekly cash management procedures, which included negotiating better terms with customers e.g.  Mercedes Benz agreed to pay in 10 days instead of the customary 60 to 90 days. The weekly cash calls lead to an intense focus on operations including:

  • Inventory turnover and just in time delivery
  • Lean manufacturing
  • Speeding up change overs from product to product to reduce downtime
  • Tracking how far a part travelled in the plant to identify inefficient material handling
  • Renewed attention to each plants safety performance
  • Strict controls on overtime. For example at the Richmond plant, machines with 10 stations were running with 5, causing 7 day operations and excessive overtime.
  • Strict controls and reporting on scrap and maintenance supplies
  • Significant headcount reductions across the board

The Italian operations were eventually sold for virtually no net proceeds , but the US operations gradually improved as the turnaround effort took hold.

We negotiated a series of forbearances with the lenders that enabled Amcast to have sufficient liquidity to bid on new business and fund the required tooling to produce the newly awarded contracts.

Customers continued to apply price reduction pressure. This downward pressure on profitability was partially mitigated by a Chinese wheel manufacturing joint venture.

Eventually the turnaround attracted the attention of distressed investors , who were able to acquire the secured lenders debt at a discount. The hedge fund then implemented a “loan to own” in order to acquire the business through a Chapter 11 filing.

Unfortunately, the new owners decided not to retain, in spite of our strong recommendation, the management that had worked on the turnaround. New management took a very adversarial stance to Amcast’s major customer, resulting in that customer exercising its right to terminate and transfer the business to alternative suppliers. Having lost most of its business the company liquidated, resulting a total loss to the distressed investors.

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