Project Isotope

Situation

In 2019, the Company was in the process of a refinancing in an effort to access additional liquidity. G2 had previously worked with the Company’s new CFO on a prior engagement. The CFO reached out to G2 to help support the refinancing process and help with near-term and long-term financial forecasting.

Engagement

G2 was engaged in 2019 to assist with a refinancing process that was underway with the existing Lenders at that time. That refinancing was completed in early 2020, after which G2 remained engaged to support efforts such as improving the 13-week cash flow forecast, assisting with long-term financial modeling, and preparing for strategic updates to the Board of Directors. In late 2020, the Company engaged G2 to assist in a broader refinancing, which was completed under Project Nautilus through early 2021. G2 remained engaged to help with financial forecasting and valuation workstreams thereafter.

In mid-2022, the Company’s forecasts began to show potential liquidity and financial covenant challenges as a result of missing their performance targets in early 2022 due to the effects of the COVID-19 pandemic—including supply chain disruptions, project delays, rising labor costs, and labor shortages—and inflationary pressures. In addition, the company lost two key contracts, resulting in sustained negative cash flow. G2 assisted with an amendment to the credit agreements in August 2022.

The Company’s financial performance continued to decline through 2022 and by November, the budgeting process indicated that the Company would likely not be able to generate sufficient liquidity in 2023. G2 performed a strategic alternatives analysis, and the Company engaged an investment bank to pursue a sale process in early 2023. G2 supported several amendments to the credit agreements between December and April to provide the Company with additional liquidity to support working capital and operational disbursements while the sale process was ongoing.

The Company filed for bankruptcy under Chapter 11 in July 2023 with a stalking horse bidder identified through the sale process run in the first half of 2023. G2 supported the bankruptcy preparation efforts, as well as working with the CRO during the bankruptcy process. Certain contracts were rejected upon filing for bankruptcy, but substantially all assets were sold to the stalking horse bidder in September of 2023.

Outcome

A strategic business purchased substantially all of the Company’s assets and contracts as a result of a 363 sale after the Company filed for bankruptcy under Chapter 11. This allowed for a continuation of operations of the majority of the Company’s contracts and resulted in the continued employment of most of the Company’s employees under new ownership.

The Company’s Lenders upon filing of bankruptcy both participated in DIP financing. The RLOC Lender received a full recovery of their prepetition and DIP financing. The Term Loan Lender received partial recovery of their credit facilities, which was the best outcome for them given the other alternative options at the time.”