Our Track Record
Case Study – Rely Precision Casting (BR + Operational Turnaround)
CLIENT PROFILE
An investment casting foundry using precision wax die casting in its molding process to make various components for various industries.
CLIENT SITUATION
A group company was placed into rescue resulting in the bank restricting the company’s debtor facility due to its intercompany suretyship commitments. The client had already experienced trading losses due to industrial strikes and extended seasonal shutdowns giving rise to severe cash flow constraints. Poor capex maintenance resulted in significant production inefficiencies resulting in production quality issues.
OUR SOLUTION
The company was placed in rescue to help navigate a hostile relationship between the company and the lender. Operational interventions were made with the appointment of an operational turnaround expert who introduced operational and sales KPI’s and a maintenance plan to enhance operational efficiencies and generate cash flow. A revenue sharing agreement was entered into with the company’s primary lender resulting in the full repayment of their debt facilities. A PCF funder was introduced to help fund restructuring costs and the working capital needed to grow production and cash flow generation.
RESULTS
During the operational turnaround, a new contract was entered into with Gibela Rail, one of the largest contractors to Prasa. Existing customer relationships were restored and once profitable the company was successfully sold.
Case Study – Specialised Vehicle Manufacturer (IBR)
CLIENT PROFILE
The company’s business is the supply, delivery, manufacturing and maintenance of specialized vehicles in addition to sales of specialised equipment.
CLIENT SITUATION
The company was unable to pass increased costs post covid onto its customers, resulting in a significant squeeze in margins such that the main business activities are conducted at a loss. Additionally, two foreign contracts were pursued which required significant cash and which had not yet been concluded resulting in an overdraft of nearly R200m.
OUR SOLUTION
Working with the management of the co and after conducting a detailed review of all information made available to the Engaged team, it was evident that the company was not pricing its service offering correctly by taking into account all production costs when quoting on a contract, and that the company was not actively pursuing a solution but rather ‘kicking the can down the road’ by using advanced payments from new underpriced orders to fund cash shortfalls on orders near due. As we got involved very late and the situation was far worse than expected, our IBR concluded that the company should use the protections provided under Business Rescue to reprice or cancel loss-making orders while concluding the foreign contracts asap.
RESULTS
The IBR report gave the bank and the client a concise, independently-prepared opinion and information with which to attempt to forge a solution to the company’s financial distress and repayment of debt.
Case Study – Property Holdco (Legal Defense)
CLIENT PROFILE
The company is the asset holding company of the trading business.
CLIENT SITUATION
The client had bound the property holding company as co surety for group debt. The Holdco had unfortunately not been able to keep up with payments. The company was facing a final liquidation application which would have resulted in the company being liquidated and the trading company which is now profitable ceasing to trade and over 200 jobs being lost.
OUR SOLUTION
Working with management and their legal team, the EBT team drafted a rescue plan in a week and agreed to approach the court to place the company into rescue as an alternative to final liquidation under section 131 of the act. The plan included a disposal of all non-core assets as well as the payment of monthly interest on the outstanding debt.
RESULTS
The client’s legal team and the bank were able to settle on a 10 month pause in the final liquidation application, as well as a pause on filing for Business Rescue, allowing the proposed rescue plan to be rolled out on an informal basis.
Case Study – CP Crane Hire (BR + Operational Turnaround)
CLIENT PROFILE
Crane hire company locked into complex contracts with large international manufacturers for the erecting of wind turbines.
CLIENT SITUATION
The client had won 4 very large contracts for the construction of windfarms with Eskom as the end client. The customer geared up significantly to acquire the specialized cranes and skilled staff needed to execute the contracts. The scale of the operations and penal nature of the contracts entered resulted in execution delays giving rise to significant claims ultimately rendering the contracts unprofitable.
OUR SOLUTION
The company was placed in rescue to benefit from the contractual moratorium enjoyed under the act. This allowed for the renegotiation of contract terms with milestone payments that allowed for the completion of all of the windfarms. This was achieved by appointing an interim CEO to help manage operational matters at ground level thereby fostering a trust relationship with the various contractors on site. Some assets were earmarked for sale to help pay down debt while many lease agreements were renegotiated to more affordable levels in an attempt to mitigate cash flow losses.
RESULTS
All the company’s debt was repaid and the company exited Business Rescue with over R100m in income producing assets. All major contracts were completed with all claims and counter claims settled in the process. The company continues to trade.
Case Study – HDPE Pipe Manufacturer (Phase 1) (CRO Project)
CLIENT PROFILE
Local & international HDPE pipe manufacturer with >10% of market share.
CLIENT SITUATION
Significant plant expansion (driven by product demand and market share growth) over the past 5 years had been hampered primarily by distraction from the core business. This resulted in constrained cashflow causing prolonged production stops & creditor/ investor repayment issues.
Current status: production activities ceased Dec ‘24.
The company may be facing liquidation if additional capital is not secured from the primary lender to restart operations & improve cashflow.
OUR SOLUTION
Management and the primary lender in collaboration with the EBT team conducted a cross functional techno-commercial evaluation (plant equipment capacity, planning, operations, input cost & commercials) under a mandate where EBT working with Adamantem Chartered Accountants was appointed as CRO. The fact-based assessment supported the future options and phases.
Status: The Interim CRO report with recommendations has been presented to client recently and awaiting final decision on the way forward.
RESULTS
A comprehensive fast-track assessment was completed in 3 weeks from commencement of the CRO role, and resulted in
- clear understanding of the root causes,
- viability assessment on whether to continue with the business, and
- best options/approaches to restart, stabilize and grow the business.
Case Study – Project X (Shareholder-mandated IBR)
CLIENT PROFILE
The company is a property holding and management company with a sizeable portfolio including student accommodation.
CLIENT SITUATION
The client had bound the shareholder to a significant amount of debt arising from rapid growth, which was not managed optimally. Accordingly, the company was facing liquidity challenges and required the shareholder company to continually fund shortfalls and expansion plans. In addition, there were numerous inter-co loans between the various subsidiaries and focus was being lost.
OUR SOLUTION
While EBT was appointed by the shareholder company, we worked very closely with management to reconstruct and create meaning in the financials. A reconstruction of the financial information using the trial balance created a more coherent reporting system across the group.
RESULTS
Through our findings non-functional and non-core businesses were identified and wound down or out. Once the shareholder could understand the underlying businesses and reconciled loans within the group, they were comfortable to continue funding the company. Ultimately, this was now a slightly smaller and more focused group.
Further expansions in the group were now more focused and only served to boost or add value to the core businesses.
Case Study – XYZ Med (Medical Aid Curatorship)
CLIENT PROFILE
EBT was appointed as the curator of a medical aid scheme with approximately 28,000 members and beneficiaries, whose solvency ratio had declined to 6,6% which was well below the mandatory ratio of 25%.
CLIENT SITUATION
The client solvency ratio had fallen well below the mandatory level and internal restructuring plans had not delivered the required results, forcing the regulator to go to court to place the scheme under the control of a curator.
OUR SOLUTION
Working with management and their actuarial team we were able to undertake detailed financial reviews of each plan and its claims history. By inter alia implementing higher increases on certain loss leader plans and normal increases on others we were able to stabilize the business.
The team also implemented strict budgeting and cost cutting measures at a head office level.
RESULTS
By October 2021 (after 20 months under curatorship) the solvency ratio of the scheme had improved from 6,6% at commencement of curatorship, to 30%. Achievement of the mandatory solvency ratio of 25% (our main KPI) was achieved well ahead of the target envisaged by the turnaround plan.
Case Study – Tripplo (BR + Shareholders Dispute + Accelerated M&A)
CLIENT PROFILE
The company is the developer of bespoke software solutions for the Logistics Space with large national customers.
CLIENT SITUATION
The client needed additional funding, but multiple shareholders were unwilling to either provide this funding or to reduce their shareholding for the funds to flow. Leaving the company in a deadlock.
OUR SOLUTION
Working with the shareholders it was decided to place the company into rescue for a short period to allow:
- The BRPs to negotiate a path forward.
- The deployment of critical Post Commencement Funding .
- The marketing and sale of the business over a short period of time.
- To allow for continued trade to retain clients and value in the business.
RESULTS
The rescue team ran an accelerated Business Rescue process to sell the assets and the trading name of the business. An employee rationalisation process took place allowing the Newco to rehire a smaller team.
The entire sales process was completed in one month and it took another two months to get to substantial implementation.
No major customers were lost during this process.
Case Study – PLI (BR + Operational Turnaround)
CLIENT PROFILE
The company is a manufacturing company that manufactures and sells aluminium and fiberglass ladders.
CLIENT SITUATION
The client became distressed due to poor gross profit margin, high head office costs and a material shortages which impacted the entire industry, resulting in delays to manufacture products for customers. These delays led to a reduction in sales and contributed to further reputational damage due to late deliveries. To mitigate the reputational harm that had occurred staff were required to work overtime which led to a 70%-100% increase in labour costs further contributing to cash flow shortages.
OUR SOLUTION
The EBT team worked with the shareholders to draft a rescue plan which envisaged a trade-out. The team engaged with the major client to improve margins, opened fresh lines of credit with the major supplier and found a white knight investor to work with the founder to grow the business.
RESULTS
The company went from a R10m loss in 2019 to profitability in 2020 and a turnover in excess of R110m in 2023, and is now considered to be the largest ladder manufacturing company in South Africa.
The company was able expand its range of products and with the support of its white knight investor was able to purchase state of art equipment and a new manufacturing facility.
Prior to the completion of the rescue process the investor had recovered their initial investment of R15m in full.
Case Study – CSI (Voluntary BR + Operational Turnaround + Sale of Assets & Business)
CLIENT PROFILE
A market leading industrial steel company specialising in fabrication of roofing solutions as well as distribution of aluminium and stainless steel products. The company had a national branch network and an African footprint.
CLIENT SITUATION
Due to an aggressive expansion strategy and steel industry woes, the company became vulnerable to external pressures. A combination of major supplier directives such as minimum order levels and rebate cuts, with lender facility reductions resulted in liquidity challenges. An internal re-engineering plan initiated Jan 2020 was foiled by the onset of Covid-19. Creditors required a solution to unlock their value.
OUR SOLUTION
The company was placed in Business Rescue during July 2020 in the midst of Covid-19. Supported by Deloitte in the Business Rescue, the BR plan was approved just 6 weeks after the company went into rescue. The plan envisaged a disposal of the loss-making division’s stock and the sale of the other division under an accelerated M&A process.
RESULTS
A deal for the sale of the majority of Stalcor’s assets, one of the two primary CSI divisions, was concluded just two months after the approval of the Business Rescue plan. This enabled the BRPs to fund the losses of the other primary division, Global Roofing Solutions, which was sold to a private equity firm, following a return to consistent profitability facilitated by the BR team and management in February 2021.
Kareevlei Mining (BR)
CLIENT PROFILE
The company is a diamond mine located in the Northern Cape.
CLIENT SITUATION
A shareholder dispute resulted from a failure to pay one of its key suppliers which happened to be a related entity to one of the shareholders. The matter was further complicated by the fact that one of the shareholders, a London listed entity, had entered into administration in the United Kingdom.
OUR SOLUTION
Working with the management and their team the BRPs were able to provide an operational restructuring of the business reducing costs and managing an employee rationalisation process.
The BRPs were able to negotiate in excess of R26m worth of PCF to assist with trade and the operational turnaround.
RESULTS
Through ongoing engagement with the DMRE and creditors the BRPs were able to negotiate for the sale of creditor claims to the new owner, who then also bought the 100% of the shares of the company via a share transaction with the UK Holdco.
This allowed the new owner to recapitalise the business and finance the further development of the mine and to start mining using a proper Whittle Pit Optimisation plan. Something that had not been done historically.
Logistic & Distribution Company (IBR)
CLIENT PROFILE
The company is a logistics and distribution company involved in both bulk warehousing and the deliveries for national brand owners.
CLIENT SITUATION
The company client sold a majority share in the company to a large conglomerate who was frustrated by ongoing losses.
OUR SOLUTION
Working with the management team, EngagedBT completed an IBR which contained a set of recommendations that could be implemented internally.
The solution was a two-phase approach with phase 1 restoring the company to break even and phase 2 moving it to profitability
After presenting this report to both the majority and the minority shareholders they agreed between themselves to implement the recommendations.
RESULTS
Within a month of implementing the phase 1 recommendations the client reached break even. They then implemented phase 2 program early and were profitable with 3 months.
Case Study – SG Diesel Supplies (BR + Operational Turnaround)
CLIENT PROFILE
The company is a logistics and transport brokering company
CLIENT SITUATION
The client had various bad debts from debtors that went into Business Rescue and liquidation. Additionally, one of the three trucks was hi-jacked in early 2024, which resulted in the customer being unable to pay SG Diesel. The above coupled with a fraudulent loan taken out, resulted in the company having to file for Business Rescue.
OUR SOLUTION
A set-off agreement was put in place, whereby a large competitor and supplier in the industry agreed pay for any cost incurred as well as allow the company to use their diesel filling stations. In return the company outsourced its brokering clients to the competitor/supplier, and the profit from this arrangement is paid to the company on a monthly basis to assist with operational costs. The BR Team, also assisted in renegotiating various agreements, such as the lease agreement and further worked towards ensuring the Company’s compliance, for example registering the Company with the NBCRFLI.
RESULTS
The secured creditors received 100 cents in the rand, and concurrent creditors are being paid 50 cents in the rand over a period of time, through the continuation of trade. This rescue is still ongoing.
Case Study – Citrus Farming Group (Group re-organization, financial restructuring and sale under voluntary BR)
CLIENT PROFILE
The company owned a number of farming assets and facilities across several legal entities.
CLIENT SITUATION
The client had over invested in new farms and long-term biological assets using short-term financing facilities and had run into severe cashflow problems and breached their covenants.
With the fruit almost ready to harvest and being the security of the lenders, all parties needed a method to prevent the asset from spoiling, whilst a suitable investor/buyer for the group was sought.
OUR SOLUTION
Working with the management and lenders we were able to agree to further PCF funding for the harvest. We initially tried to sell off some of the farming assets on a piece meal basis. This was successful to a point but was still insufficient to ensure solvency and sustainable earnings sufficient to service the debt. The challenge was exacerbated by a highly acrimonious lender/shareholder relationship, as well as crippling European export restrictions imposed on SA during the process, which were severely detrimental to citrus prices and farm values at the time. Throughout the process an investor/buyer was sought for the group as a whole.
RESULTS
The Group was eventually sold to a single buyer with the original shareholders retaining a stake in the Newco. This was sufficient to repay the secured creditor/lender in full, the PCF creditors in full and save the jobs of all the farm workers.
Case Study – Social Housing Non-profit Company (BR + Operational Turnaround)
CLIENT PROFILE
The company is a social housing business with several properties in their portfolio.
CLIENT SITUATION
The company had not been able to keep up with payments to major credit lenders as well as the municipality. One of the buildings had been hijacked for several years, and liquidity was a major problem for the company. This affected maintenance for the properties.
Naturally, there was a complete breakdown of the relationship between creditors and management.
OUR SOLUTION
Working with the management, the EBT team appointed a property manager to assist in the turnaround of the hijacked building. EBT appointed lawyers who worked round the clock to ensure an urgent eviction order of the hijackers. Once evictions were done refurbishments commenced on the property to allow re-tenanting – this is in progress.
One of the dilapidated properties was also sold to raise capital.
RESULTS
According to the Business Rescue plan a compromise was approved by creditors. Being an operational turnaround combined with a sale, the partial sale process is now in progress. It is anticipated to result in a new group with a better relationship with creditors, and settlement of creditors (as per BR plan).
Case Study – Regional Supermarket Chain (BR + BRIL)
CLIENT PROFILE
The company was a major independent local retailer primarily trading in the KZN area with over 50 supermarkets.
CLIENT SITUATION
Its major supplier reduced its credit limit by over R100m leading to a cashflow crisis and poor results in key trading periods due to stock shortages.
As the company was no longer able to pay its creditors on time it was eventually put on stop supply by most of its suppliers, leading to empty shelves and the loss of shopper and store value.
OUR SOLUTION
We were able to agree with key suppliers to continue trading on a cash basis, until the stores were sold. We ran an accelerated M&A process offering the asset as a whole or as individual stores. We were able to get agreement with all landlords barring one to continue to operate while the business was being sold.
RESULTS
Following the accelerated M&A process all the stores were bought by a single bidder, who was then able to provide some PCF until CompCom approved the transaction.
The CompCom process was completed in just over a month and by doing so all creditors got a better return than they would have done in liquidation and over 2,000 jobs were saved.