Optimise4

Optimise4 in Financial Services - Company Doctor

Objective: The IT Company was in trouble. The newly appointed Non Exec visited their bankers to discuss the viability of this PLC employing 150 people. Having attended his first Board meeting he became concerned about their cash flow statement. Being aware of his fiduciary duties as a director he had to act.

Activity: The Company had a 2M GBP bank loan. 3i was a 20% shareholder and had provided an equity injection the year before. The Company's bankers wanted to protect their loan from going into default. Trading for another 6 months would have seen the Company trading while insolvent and Directors in breach of their duty.

Services: An Optimise4 Associate with very senior banking experience was asked by the lead bank to be a Company Doctor. His brief was to recover what he could for the bank. The Optimise4 Associate was appointed Chief Executive and the Company was reduced to 65 employees with only 1 of the 7 directors being retained.

Outcome: The heart of the cash flow problem lay in the purchase department. The IT goods purchased in South East Asia were bought without price protection. They were landed 6 weeks later when shop prices had dropped yet again. As an IT reseller the Company was not in a position to compete with Dixons and PC World.

Value: The Bank recovered its 2M GBP loan. Creditors entered into an informal IVA and recovered 80p in the pound. Shareholders, including 3i, lost their equity. The Company was broken up and subsidiaries were sold off.