OPF (Ottawa Plant Food)
$90 million Revenue. Agriculture Chemical & Feed Distributor. $20 million Secured Debt.
- Company decided to ramp up operations while a drop in commodity prices had yet to hit bottom, ultimately causing large losses two years in a row.
- Agriculture commodity prices dropped causing a ripple effect to the suppliers of chemicals and feed.
- Large chemical manufacturing companies merged, further causing prices to drop by as much as 25%.
- The company doubled down on their inventory position in the middle of the turmoil causing large losses two years in a row.
- Poor accounting and financial disciplines causing a large disconnect between operations and finance team.
- Seasonal business with liquidity shortage during the late summer and fall season.
- Heavily reliant upon manufacture rebates to fund off-season liquidity shortage.
- ABL lender wanted to be refinanced prior to the beginning of the next season.
- Excess inventory returned to manufacturers to reduce outstanding payables.
- Aged inventory liquidated to provide additional liquidity for paydown of the secured debt.
- New accounting system implementation to better track and manage manufacturer rebates.
- New policies and procedures established between operations and finance to better manage the business.
- Exit non-profitable manufacturer rebate programs.
- Inventory reduced by $13 million/60% to satisfy vendor payables and covenant compliance with ABL lender.
- Exited several non-profitable manufacturer rebate programs and negotiated higher rebates from long-standing suppliers.
- Implemented new accounting system to better track profitability and manage rebates.
- Refinanced $20 million ABL loan to a new lender.