CCC was a publicly held company that developed, marketed and supplied a variety of automobile claims services. The company was out of compliance with certain of its loan covenants and was experiencing negative cash flow. The relationship between the company’s senior secured lenders, management and the equity sponsors was severely strained. We were retained by the lenders to provide, on an urgent basis, an independent review of CCC’s operations, design revised financial covenants and assist in the negotiations of a waiver and amendment to the loan agreement to, if feasible, enable the company to file its 10K timely with an unqualified opinion.
An analysis of CCC’s financial operations and cash flow drivers highlighted the divisions/product lines that generated significant cash versus those that were under-performing. A strategy was developed and negotiated between the parties, including the company’s independent auditors, to base the waiver and amendment around the company’s operations that were cash flow positive while simultaneously placing strict limits on spending for development projects and other non-core activities. Financial requirements of the amendment were to be supplemented by enhanced monthly operations-based reporting on both the key development projects and non-core activities to track progress in meeting established objectives. We were invited by the company to return and assist in the development of improved weekly and monthly operating reports and cash flow forecasting models. The company and its equity sponsors embraced our recommendations regarding the wind down of the certain non-core operations.
The restructuring was approved and documented in time to file the 10K with an unqualified opinion. The senior lenders and the company successfully restructured the debt while the company abandoned several unsuccessful product lines. With the new streamlined organization, the company’s EBITDA improved dramatically, the bank debt was paid in full and the stock price doubled in the 18 months following our engagement.