Representative experience

Financial analysis applied to consequential decisions.

Selected engagements and transactions spanning private equity and current advisory work. The situations differ, but the common thread is financial analysis applied to consequential decisions involving capital, liquidity, transactions and operating performance.

Distressed Acquisition & Restructuring

Enron Bankruptcy Acquisition

Situation

During the Enron bankruptcy, Lime Rock Partners pursued the acquisition of a 91% interest in an energy company held within the bankruptcy estate. The transaction required valuation of the underlying assets, negotiation with the seller, and navigation of a far-reaching and complicated bankruptcy process before the investment could close.

Approach

Led valuation, purchase-price negotiations and financial due diligence, selected specialized bankruptcy counsel, and managed the acquisition process through court approval. Following the acquisition, worked directly with management on the restructuring and integration of the business. Negotiated the acquisition of the remaining management ownership, led the corporate restructuring and employee severance process, and briefly served as President during the transition.

Outcome

The acquisition was completed through the Enron bankruptcy process and the underlying assets were subsequently transferred into another Lime Rock portfolio company.

91% interest acquired · Enron bankruptcy · Court-approved transaction · Post-acquisition restructuring

Acquisition Due Diligence & Financing

Hercules Offshore / Global Industries

Offshore energy services · Gulf of Mexico

Situation

Lime Rock Partners acquired Global Industries' 22-vessel liftboat division for approximately $53 million as part of the build-out of Hercules Offshore. The investment required comprehensive due diligence of the business and assets, as well as an acquisition financing structure that would minimize the amount of equity capital required.

Approach

Led Lime Rock's due diligence of the acquisition, evaluating the fleet, historical financial performance, operating economics and key investment risks. Also led the acquisition financing from the sponsor side, developing and presenting the lender credit case — including leverage, loan-to-value and debt-service coverage analysis — and managing the commercial bank financing through underwriting, due diligence, documentation and closing.

Outcome

More than half of the purchase price was financed with low-cost commercial bank debt, reducing the equity capital required for the acquisition. The acquired liftboat fleet became the core component of Hercules Offshore, which completed its IPO in 2005. The investment ultimately generated a 9.4x return on invested capital.

~$53M acquisition · Led acquisition due diligence · 22-vessel fleet · >50% bank financed · 2005 IPO · 9.4x ROI

International Acquisition

Fred. Olsen / PSL Energy Services

Norway / United Kingdom · Energy services

Situation

Identified an opportunity for Lime Rock portfolio company PSL Energy Services to acquire Fred. Olsen's Norwegian land-drilling operations. The approximately $13 million transaction offered the opportunity to acquire an established operating business at approximately 4x EBITDA and significantly expand PSL's presence in Norway.

Approach

Originated and led the transaction for Lime Rock, including direct negotiations with the seller, valuation, financial and operational due diligence, and development of the investment case. Worked directly with PSL management to evaluate the strategic fit and complete the acquisition and integration of the business.

Outcome

Completed the approximately $13 million acquisition at ~4x EBITDA. The acquired Fred. Olsen operations subsequently grew to represent approximately half of PSL's EBITDA by the time the company was sold to Halliburton in 2007. Lime Rock's investment in PSL ultimately generated a 6.6x return on invested capital.

~$13M acquisition · Opportunity originated · International transaction · ~4x EBITDA entry multiple · ~50% of EBITDA at exit · 6.6x ROI

Complex Refinancing

Los Angeles Commercial Property

Situation

The owner of an approximately $13 million commercial property had $4.2 million of debt across four loans. A major tenant was significantly delinquent on rent, complicating refinancing at the same time that part of the property's debt was approaching maturity. Refinancing all of the property's debt would also have replaced two attractive legacy loans carrying a 3% weighted-average rate with substantially more expensive market-rate financing.

Approach

Analyzed the existing capital structure and developed a refinancing strategy that preserved the two low-cost legacy loans while refinancing only the debt that needed to be replaced. Negotiated the required subordination with existing lenders and worked with the new lender through underwriting and closing despite the tenant-related complications.

Outcome

Secured a new $2.4 million, five-year commercial bank facility while preserving the two legacy loans at a 3% weighted-average rate. The structure is estimated to save approximately $75,000 annually and nearly $400,000 over five years compared with refinancing the property's full debt at then-current market rates.

~$13M property · $4.2M existing debt · $2.4M new facility · 3% legacy debt preserved · ~$400K estimated five-year savings

Fractional CFO & Strategic Finance

Los Angeles Apparel & E-Commerce Company

Situation

A Los Angeles apparel company needed more sophisticated financial management while also developing its direct-to-consumer business. The company required better forecasting and financial visibility, financing support, accounting oversight and a more analytical approach to operating and capital-allocation decisions.

Approach

Provide ongoing fractional CFO support encompassing budgeting, cash-flow forecasting, financial modeling, accounting oversight, financing, investor reporting and working-capital management. Built the company's active DTC business and introduced a more data-driven approach to e-commerce decisions, combining customer behavior, inventory availability and marketing performance to guide spending and inventory investment.

Outcome

Increased DTC sales by more than 8x while establishing the financial and analytical infrastructure needed to manage the business. Applied customer, inventory and marketing data to improve capital allocation across the business, including identifying targeted inventory investments designed to unlock existing sales opportunities while limiting incremental working-capital requirements. One such initiative generated an estimated 14x return on incremental capital invested.

8x+ DTC growth · 14x estimated return on targeted inventory investment · Fractional CFO · E-commerce analytics · Working capital

Contact

Discuss a financing, restructuring or CFO need.

Los Angeles, California

pontus@willforsadvisory.com

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