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Case Study:

Breaking the mold.

Challenge:

The subject is a Tier I and Tier II automotive supplier providing customized plastic injection molded industrial packaging to the OEMs and a myriad of Tier I and Tier II suppliers. The Company suffered declining performance and two years of significant financial losses due to volatile material costs, competitive pricing pressure, and poor internal controls. In addition, the Company’s labor contract was in dispute and the production staff was actively striking. The lender, who had sought to exit the credit, was now anticipating liquidation and a significant charge off. O’Keefe was engaged by the Company to assist in executing a turnaround and securing an alternate financing source.

Solution:

  • Negotiated an extension of the existing lender’s forbearance period to avoid liquidation with appropriate benchmarks
  • Identified key drivers of the Company’s downturn. Assisted in implementing solutions and quickly repositioned the Company to improve its appeal to potential lenders
  • Analyzed the Company’s financial position and its restructuring needs.
  • Produced a professionally underwritten financing request package and solicited loan proposals from several appropriate funding sources
  • Managed the refinancing process, maintained communication with lenders, negotiated proposals and facilitated the loan closing. Received proposals from 5 of 6 lenders who previously turned down financing request 60 days earlier
  • Overcame a potentially catastrophic issue when the Company failed its pre closing field exam with the new lender. O’Keefe negotiated a revised loan structure that met both the Company’s and the lender’s needs
  • The existing lender, who was facing a significant loan charge off prior to our engagement, was paid in full within the forbearance period
  • The Company received the financing to avoid liquidation and support its turnaround and was able to recover from this crisis and return to health

Results:

Without this turnaround and refinancing the Company would certainly have been liquidated by its existing lender, destroying the family’s primary asset and leaving many family members suddenly unemployed.

The prudent management of this case prevented the liquidation of a third generation family-owned enterprise, facilitated the Company’s financial and operational turnaround, and resulted in a full recovery for the lender.

The Company enjoyed its highest profitability one year after our involvement and the former secured lender received a 100% recovery.