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

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Overview

  • Manufacturing
  • Performance Improvement

Engagement Team