The company provides specialty welding and machining services acting as a general or sub-contractor on construction, maintenance and life extension projects. The company is an industry leader in the nuclear, fossil fuel, petrochemical, refinery, pharmaceutical, food and beverage, pulp and paper, and high purity industries.
The company experienced rapid growth due to its superior job performance at a new nuclear construction facility. The growth in the customer led to a significant concentration in excess of 80% of sales and accounts receivable. The customer concentration was forecasted to remain at that level for the next 12 months. In addition the company was defrauded by their third party payroll provider that failed to remit federal and state payroll taxes, resulting in a block on the borrowing base.
Management retained Fort Dearborn to evaluate it strategies, advise on dealings with its current lender and to seek a new lending arrangement. With Fort Dearborn’s assistance the Company successfully:
- Entered into a forbearance agreement with the current lender that expanded borrowing availability and provided adequate time to refinance the Company based on a 13 week cash flow forecast and a revised fiscal financial forecast; additionally, Fort Dearborn negotiated the inclusion of previously excluded collateral in the new borrowing base and reasonable financial covenants.
- Improved cash flow from major customer.
- Prepared materials and contacted banks and specialty finance companies to obtain a new lender.
- Received multiple proposals, facilitated lenders due diligence and closed the transaction with a major financial institution within 90 days of executing the forbearance agreement.