Energy Midstream
The Situation
- Oil and gas midstream company with three natural gas terminals, ten crude oil terminals, and an internal transportation operation
- Working capital line was utilized for partial financing to construct a new natural gas terminal, which later significantly reduced access to short-term financing; new accounting system was poorly integrated; and the business ran multiple profitability centers under a single income statement without recognizing divisional profitability
- Relationship with existing lending institution came under duress as the company tripped multiple loan covenants and had no access to their existing line of credit; reductions in the company’s borrowing base caused the revolving line of credit to be over-advanced by $40MM on a $60MM facility
Role(s)
Restructuring Advisor & Interim Officer
- CRO – facilitated maximizing asset values in 363 sale process
- FA – restructuring advisors
The Work
- CR3 engaged to assist in potential restructuring needs
- Established a transparent cash budget and weekly reporting process
- Determined highest value for the company would be achieved through an asset sale and led marketing efforts by retaining and working with an investment bank to expedite asset sales
- Helped the client understand the severity of the existing situation and the need to take quick, decisive action to remedy the situation
- Initially pursued an out-of-court sale for the enterprise, eventually filed Chapter 11, and sold majority of company assets in an orderly 363 process
The Results
- Accomplished an 85% return on capital, including interest and fee payments, on a fully non-performing loan for the primary secured lender
- Reestablished trust between the company and its lending institution by implementing control and transparency in the cash management process
- Provided transparency on options most likely to maximize value while leading the client through the restructuring process