OCTG Manufacturer and Distributor
The Situation
- Leading manufacturer and supplier of Oil Country Tubular Goods (OCTG) in the petroleum industry with products including casing, tubing, couplings, production accessories, drill pipes, drill collars and drill string accessories
- Company suffered significant losses in volume and margin after oil price drop; downturn continued as company grappled with high levels of high cost inventory
- Company was left facing both financial covenant defaults and availability constraints under existing ABL facility
Role(s)
- Financial Advisor
The Work
- Negotiated multiple forbearances, assisted with asset sales, appraised inventory, and prepared financial models
- Engaged in discussion with trade vendors and contacted potential lenders for refinancing options
- Invested significant time in managing relationships with both secured lenders and trade vendors with significant past due balances
- Oversaw operational improvements
- Identified options and assisted with the refinance of the ABL facility to a new lender
The Results
- CR3’s work coupled with the improving economic environment (higher oil prices and rig counts) resulted in EBITDA improved from losses of $14.4MM to positive EBITDA of $10.8M
- Reduced Inventory, generated sufficient proceeds to reduce senior lender debt from $50MM to $15MM
- Extended trade payables of $10MM owed to vendors were settled with payment plans that allowed company to service obligations over 12 months, which were all satisfied