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DUKE&KAY LED THE TURNAROUND OF A COMPANY IN THE FORGING SECTOR

Situation

With an annual turnover of approximately 100M€, the company operates mainly in the forging sector of high-strength steel components for a wide variety of industries. With 2 industrial sites the company serves about 100 customers throughout 40 countries worldwide, some of which are leaders in their respective markets.

In the past years, following the related Leverage By Out operation, the involvement of a financial Investor as a shareholder led the Company to a bank debt of more than 200M€, guaranteed by a pledge on total shares.

As consequence of the 2008 recession the company suffered severe industrial and financial difficulties and they had to cope with a debt restructuring agreement with banks pursuant the art. 67 of the Italian bankruptcy law.

Duke&Kay activity

The recent worsening of the oil market and the fall of the oil related economy, brought additional financial difficulties. The pessimistic expectations of the new business plan proposed by the management, were leading to an astonishing devaluation of goodwill and heavy losses in the year. This situation led to:

  • Strongly negative net equity values
  • The need to apply for admission to a “heavy” bankruptcy procedure (called “Concordato”)

Then, as consequence, to stop the reimbursement plan of the historical debt.

The banks (pledgees of the Shares) decided to dismiss the current Board of Directors and asked Duke&Kay Executives to take over the administrative body.

Duke&Kay Team worked hard to review and present a new and effective recovery plan, including both industrial and financial measures, supported by the most appropriate bankruptcy procedures. 

Results

Thanks to the several initiatives successfully implemented, the actuals reached regularly exceeded the new recovery plan and led to EBITDA and cashflow results well above expectations since the first months.

The company turnover increased by 55% (compared to the previous year actuals), EBITDA reached 23% on sales and cash flow improved strongly.

These achievements made a banks agreement possible, including (among others) the full repayment of the existing debt in a very short timeframe and enabling the company to expand its position in the international market.

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