Safeguarding & Rebuilding Stakeholder Value

2014

DAVID HOLE, FEACTP MARK BLAYNEY, IFT

GALEN PARTNERS LIMITED

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Safeguarding and Rebuilding Stakeholder Value

Galen Partners – Spotlights

Restructure. Refinance. Rebuild.

Spotlights 1 – Aviation – Charter airline – £90m T/O

2 – Retail – Branded fashion business – £60m T/O

3 – Manufacturing – Elect & tech group – £50m T/O

4 – Food wholesale – Meat packaging – £16m T/O

5 – Retail – Soft furnishings – £14m T/O

6 – Agriculture – Tenant farm business – £9m T/O

7 – Automotive Services – Chauffeur business –£6mT/O

8 – Manufacturing – Injection moulding – £4.2m T/O

9 – Services – Property portfolio – £3.6m NAV

10 – Services – 24/7 Drainage business – £1.5m T/O



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1 – Aviation – Charter airline – £90m T/O

Role Cash crisis project leader

Context Small & niche airline Driver – VC owner Servicing the highly competitive holiday market

Key issues Loss of FD Fuel & airport suppliers Lack of capital budget Headcount

Key actions Est short term cash flow budget & monitoring Prioritisation of supplier payments & terms of business Confidence & communication of numbers

Time frame 4 months

Outcome Sale to trade buyer Cash crisis managed & optimised to facilitate sale process Safeguarding business value at a time of weakness



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2 – Retail – Branded fashion business – £60m T/O

Role Support to CFO / COO

Context VC owned fashion brand Driving agent – VC owners Est cash crisis management plan

Key issues Financial restructuring required Operational cash restricting ability to negotiate

Key actions Short term cash flow plan priority re suppliers Working capital management re stocking plans

Time frame 2 months

Outcome Cash crisis managed through Debt rescheduling negotiations completed



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3 – Manufacturing – Electronics & tech group – £50m T/O

Role CRO

Context UK listed £50m T/O Driving agents bank & Big 4 IBR on 3rd monitoring visit Strategic review of a portfolio of business

Key issues Post acquisition integration not delivering bottom line Misalignment of management in portfolio businesses Breach of bank covenants

Key actions Ops reorganisation into business units with P & L resp Cost reduction & cash generation via working capital

Time frame 3 months

Outcome Bank confidence re strategic direction & operational perf Return to within covenants Expected exit from intensive care



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4 – Food Wholesale – Meat packaging – £16m T/O

Role CRO & Interim FD

Context Supplying supermarket & discounters 12 month start up Driving agent – Shareholder

Key issues Inadequate financial information Poor governance £1.2m black hole in debtors

Key actions Stabilise governance & confidence in numbers Est confidence with clearing bank ABL Disengage with discounters

Time frame 6 months

Outcome New investor engaged £1.7m, plus new T/O of £44m New FD & FC recruited Clearing bank ABL relationship stabilised



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5 – Retail – Soft furnishings – £14m T/O

Role Interim FD & CRO

Context 50 year brand, formerly £30m T/O Bought out of Administration by VC driver 160 concessions across UK

Key issues FD dismissed, poor communication of numbers Clarity to ST cash flows & remodel business Inadequate working capital arrangements Stock lines, supply chain terms and finance cycle

Key actions Manage down ABL funder Scale back headcount Renegotiate concession host contracts Manage board through insolvency twilight

Time frame 3 months

Outcome Remodeled on sustainable concessions & stock offering Business assets sold to trade buyer via pre-pack admin More equity than debt in new company



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6 – Agriculture – Tenant farm business – £9m T/O

Role Lead Restructuring Advisor

Context 30 year tenant farmers of 300 year aristocratic farm Failure of livestock company impacts on family P/ship Mixed arable / livestock farm

Key issues Landlord notice to quit received 3 generations lived in 2 farms, prospect of no business, no homes & no income Local politics affecting livestock movements

Key actions Restructure business to safeguard assets from Co failure Restore confidence with landlord & issue new tenancy Est tactics to nullify local politics

Time frame 5 years

Outcome New 20 year farm business tenancy issued to a new company with stronger capital, governance & ownership Business, homes & income safeguarded



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7 – Automotive Services – Chauffeur business – £6m T/O


Context Chauffeur to 1st class flight passengers & celebrities First & second generation business 30 years business experience

Key issues Massive new flight contract received Purchase order + finance for 300 new E-Class Mercedes Icelandic volcano disrupts EU flights = no biz, no finance

Key actions Renegotiate & refinance purchase order Improve both car & driver utilisation Disposal of fleet based upon sound financial formulae Recruit an FD and stabilise governance of business

Time frame 6 months

Outcome Reposition & upward revaluation of family business Performance legacy reinforced by new FD Rationalised purchase order



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8 – Manufacturing – Injection moulding business – £4.2m T/O

Role Lead Restructuring Advisor

Context MBI 10 years previously Quality & long term contracts with customers Contracted & own based injected products for wholesale

Key issues Accumulated Crown debt Margin & turnover deterioration from Far East comp Mini group structure compounded by inter-co trans & whitewash process related to MBI purchase

Key actions Consensual restructuring proposal rejected by HMRC Engagement with Big 4 practice to est pre-pack admin Negotiate buyback & finance via beauty parade of ABLs Recruit Operations Director

Time frame 12 months

Outcome Simplified group structure & rebranding Pre-pack admin buy back achieved Re-banking & new ABL finance



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9 – Services – Property portfolio – £3.6m NAV

Role CRO & Refinance

Context 10 HMO properties accumulated over 20 years Sole proprietor landlord One principal lender

Key issues Inadequate governance & maintenance of properties Lack of financial skill sets within business Main lender given 12 mths notice not to renew facilities

Key actions Refinance portfolio Negotiate with lender for time with estimated outcome statements for each scenario Educate client regarding insolvency implications of Fixed charge receivership & bankruptcy forced by main lender

Time frame 2 months

Outcome Disengagement of former finance advisor Credit approved offer of £1.5m achieved w/I 3 weeks



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10 – Services – 24/7 Drainage business – £1.5m T/O


Context Ground works construction and 24/7 emergency drainage services business 10 years established, downturn in construction Prospect of further emergency drainage contracts

Key issues 2 bad debts from ground works division Invoice ABL funder & plant & mach funder working out Hi risk ground works re finance & contractual obligations

Key actions Consensual restructure accepted by creditors Cessation of ground works division & redundancies Paid off invoice & P&M finance via auction of surplus kit Recruitment of Financial Controller

Time frame 12 months

Outcome Less debt & lower risk in balance sheet Recovering net asset position More profit, more predictable margin (but lower %age)

2014



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Mid-Market / Upper SME Focus


Wide Sector Experience

Practitioners & Entrepreneurs


2014



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An Alignment of Trust & Interests


Delay = less options / value


Can you afford that ?


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Galen Partners – www.galenpartners.co.uk

http://uk.linkedin.com/in/dahole http://uk.linkedin.com/in/markblayney


http://uk.linkedin.com/in/dahole

http://uk.linkedin.com/in/markblayney