 |
||||||
 |
||||||
|
|
|
|
| Home | Sitemap | ||
|
        |
|
||||||
|
 |
|
|
|
Diversified Industrial & Environmental Company The Challenge This industrial services Company, founded in 1984, embarked on a series of large acquisitions in 1993. The Company was dramatically increased in size and capital structure, as $14 million in debt was acquired in order to finance the acquisitions. The Company lacked adequate financial and operational controls, and had no cash management procedures or budget process. In 1995, the Company lost $4.2 million, was unable to service its debt, was in violation of all major bank covenants, and was unable to pay trade creditors. The challenge was to immediately stop the losses and restore confidence to employees, lenders, and trade creditors. The Method Devonshire management was brought in by the Board of Directors to take over the financial management of the Company. New financial controls and sound cash management systems were immediately implemented. Bank confidence was regained and work began on a plan of re-organization designed to downsize the Company and reduce debt. Unprofitable divisions were closed and the assets were allocated to other profitable divisions. Within four months, the reorganization plan was completed, a new outside investor was located, and the customer base was notified of the planned legal reorganization as well as the positive changes that were implemented. Shortly after the filing in October 1996, the Company embarked on its first comprehensive budgeting process. The incentive compensation system was revised and significant fixed cost reductions were implemented. The Results Within six months, the Company successfully emerged from Chapter 11 with a debt reduction of $5.6 million and a further restructuring of debt of $1.9 million. A new bank financing totaling $12 million was placed along with a $2 million equity infusion. Fixed costs were reduced from $12.6 million in 1995 to $7.8 million in 1998. Contribution margins were improved from 38% in 1995 to 48% in 1998 and EBITDA improved from $155,000 in 1995 to $2.4 million in 1998. In early 1998, a strategic acquisition was completed adding a profitable $1.4 million revenue base to the Company. In addition, in late 1998, a marginal operating division was sold for a profit of $1.5 million with cash from the sale being used to pay down debt. |
|
|
||||||
|
||||||
|
|
|
||
|
|
|
||
|
||||
|
Case Histories | |||
|
||||
 Selected Case Histories |
||||
|
||||
| California Data Base Management Company | |||
|
||||
| Multinational Consumer Products Company | |||
|
||||
| Canadian Waste Recycle Company | |||
|
||||
 | Diversified Industrial and Environmental Company | |||
|
||||
| Exchange Listed Environmental Services Company |
|||
|
||||
|
||||
 |
||||
|
||||
|
||||
The Company | The Team | Case Histories | Current Projects | Our Approach | Contact Us |
© 2005 Devonshire Holdings, Inc. | |
