Case Study

Restructuring the Capital Base Of A Parent Company

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Insights

  • A successful parent company operated and maintained several independent companies under common ownership
  • In addition to a parent company line of credit, there were additional loans and notes between companies and some external debt, all with varying rates and maturities
  • Cash flows between companies were a challenge, as well as anticipating future cash demands related to the loans and notes
  • The company was also preparing for a large expansion project and was seeking external financing

Action

  • The Newport partner became CEO advisor and immediately analyzed unprofitable agreements, as well as collecting data on all loans, notes and outstanding debt
  • Financial analyses and projections were developed, including detailed cash flows between related companies
  • Expansion of a line of credit was achieved that reduced inter-company debt
  • Working together with the CFO, controller and key project personnel, a project financing plan and financial projections were created to guide the expansion
  • Strategic, financial and project planning skills were utilized to advise the client
  • The Newport partner’s personal contacts, as well as Newport’s firm contacts, were tapped to arrange introductions and meetings to key investors and industry partners

Results

  • Clarity was achieved for current and future cash flow demands between companies
  • A robust financial strategy was structured to support the expansion project
  • Assistance was provided for securing capital commitments to successfully fund the requirements for the project
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