Case Study:
Value-Added Distributor of Pipeline Valve Solutions
Completed turnaround of struggling valve distributor while remedying default conditions with senior lender
The Company was a distributor of custom pipeline valve solutions primarily for the midstream transmission of natural gas, as well as petroleum liquids. Financial performance deteriorated from 2019 to 2021 due to industry headwinds such as low crude oil prices, Covid-19, and new government regulations restricting new pipeline construction. As a result, the Company saw an increase in excess/aged inventory and was not meeting conditions of the loan agreement with its senior lender. Subsequently, the lender required the Company to retain a financial advisor to assist in remedying the potential default situation and return financial performance to levels that could adequately meet the terms of the loan agreement.
The Solution
Harney Partners was tasked with preparing a comprehensive financial assessment of the Company including primary risks, opportunities for savings and/or value creation, and areas to improve financial and operational efficiency
Created forward looking three-statement model for long-term assessment of capital needs
Built a 13-week cash flow model to measure weekly cash availability and report back to the current lender.
Led effort to liquidate excess inventories to generate incremental operating cash resources and bring the Company in line with existing loan requirements
Assisted in managing relationship with the senior lender while producing reporting required under the loan agreement
The Results
Successfully monetized aged inventory in a difficult market to meet the collateral requirements of the senior lender and to also pay down aged balances to primary vendor.
Returned the Company to cash-flow self sufficiency to meet the terms of the loan agreement
Strengthened company’s working capital allowing it to handle future growth and seasonal fluctuations.
Created new processes that improved communication between sales and operations which led to more efficient inventory planning and forecasting
Led effort to hire and train a full-time Controller while completing a successful transition/exit.
Services & Roles
Turnaround and Restructuring
Financial Advisory
*Some engagements may have been performed by team prior to joining Harney Partners.
