Operational challenges and declining performance
FRP’s first step was to thoroughly review the company’s historical and forecast trading performance, as well as the cash flow implications on its financial covenants. Our team worked closely with the sponsor, management, and the bank to understand the debt capacity and the impact of the business’s underperformance on future financial commitments. Through this review, we modelled key trading risks in risk- based sensitivity scenarios, highlighting potential outcomes under both solvent and insolvent options. These scenarios helped all parties better understand the risks, costs, and benefits of each route forward. Reviewing financial performance and assessing options
Based on our analysis, FRP provided recommendations on a covenant reset and proposed enhanced monitoring of the company’s performance. This strategic advice allowed the bank to adjust its expectations and be better prepared for any future adverse performance. We also provided a detailed Estimated Outcome Statement, which outlined potential returns to creditors in various insolvent scenarios. Our work enabled the group to continue trading while the bank and management had a clearer path to navigate through future challenges, helping to stabilise the business for the long term. Strategic advice and covenant reset for stability
Project Aries, a manufacturer of snack and cereal bars, was trading significantly below budget due to a series of operational challenges. These included constraints on raw materials, shortages in the labour market, and rising utility costs, which negatively impacted production capacity and reduced productivity. As a result, the company’s margins were eroded, putting its financial performance under increasing strain. With the business facing mounting pressure, FRP was engaged to help assess its financial position and provide strategic advice to support recovery.
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