ABOUT THE COMPANY:
The Company is private equity backed automotive performance aftermarket parts manufacturer and distributor of lift and leveling kits and component parts for off- and on- road trucks, Jeeps, and multi-purpose vehicles. The Company was founded in 1977 and headquartered in Phoenix, Arizona.
SITUATION:
The Company faced a challenging situation triggered by the COVID-19 pandemic, resulting in a liquidity crunch. Supply chain disruptions, increased order lead times, and overstocked inventory caused financial stress. During the early part of COVID-19, as people stayed home and engaged in outdoor activities, the Company experienced a surge in sales to unprecedented levels. Subsequently, the Company strategically placed orders from overseas vendors, which took significantly longer than expected to reach the Company's distribution centers. By the time the inventory arrived, the consumer demand has soften significantly. An increased level of inventory and slowdown in consumer purchases further exacerbated the Company’s liquidity issue, tying up a significant portion of the Company's cash in working capital.
ENGAGEMENT:
The Company engaged G2 to assist in building the long-term financial model, a 13-week cash flow forecast, facilitate negotiations between the Company, the sponsor, and the lender group. In addition, G2 assisted the Company's management team in developing operational milestones (initiatives include inventory reduction, cost cutting, warehouse consolidation) that were ultimately presented to the lenders, showcasing the Company's progress in implementing certain critical measures to preserve cash. Subsequently, the Company engaged G2 to support the Company in the negotiations of amendment with the senior lenders, structuring meaningful and reasonable financial covenants, while facilitating a capital infusion from the sponsor. Lastly, the Company retained G2 to negotiate payment terms with critical vendors to manage and preserve cash.
OUTCOME:
G2 quickly rebuilt the Company’s financial model, improved the 13 week cash flow reporting mechanics and worked constructively with the lenders’ financial advisor. G2 assisted the Company’s management team in developing and presenting the operational initiatives and contingency plan should the identified initiatives not improve the liquidity profile. G2 then successfully negotiated the amendment to the credit agreements and supported the Company and the senior lenders in structuring the outstanding term loan and implementing reasonable and achievable financial covenants. In addition, G2 effectively communicated with critical vendors and negotiated payment terms. As a result, the Company received the remaining funding required from the sponsor to pay critical vendors and maintained healthy liquidity levels.
DEAL TEAM:
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Exclusive Restructuring Advisor
G2 was engaged as Chief Restructuring Officer (“CRO”). Through the CRO, G2 developed and executed liquidity management tactics for the Company and its stakeholders.
Exclusive Restructuring Advisor
G2 was engaged to facilitate negotiations for more favorable payment terms with key vendors, aiming to optimize cash flow management.
Exclusive Restructuring Advisor
G2 was engaged to perform a Phase 1 strategic alternatives assessment.
Exclusive Restructuring Advisor
The Company engaged G2 as its Chief Restructuring Officer. Through the CRO, G2 developed and executed liquidity management tactics for the Company and its stakeholders.
Exclusive Restructuring Advisor
G2 conducted a rapid Phase 1 Assessment and developed a report that included an assessment of the business, operations, and financial condition of the Company, short-term liquidity, near-term capital requirements, and strategic alternatives.
Exclusive Restructuring Advisor
The Company engaged G2 to assist in building the long-term financial model, a 13-week cash flow forecast, facilitate negotiations between the Company, the sponsor, and the lender group.
Exclusive Restructuring Advisor
G2 was engaged to complete a Phase 1 assessment of the Company’s financial forecasts and its ability to return to pre-COVID levels of financial performance.
Exclusive Restructuring Advisor
G2 conducted a Phase I Assessment focused on liquidity and cash flow management assessment, business and operational strategy review, refinancing options, and strategic alternatives.
Exclusive Restructuring Advisor
G2 worked alongside creditors and management to develop a Phase 1 Assessment. G2 advised the lenders with respect to the financial position of the Company.
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