Driving a successful business turnaround in the mining services industry

Leave a comment   Published in: ,    on August 19, 2014   by Justin Ward

Macleay Partners worked with one of Australia’s leading specialist mining services companies to restructure its operations and secure lender finance to underpin ongoing growth.

Background

MCA Engineering (MCA) is an Australian company that helps the world’s biggest miners resolve complex challenges and manage critical maintenance tasks. MCA has a workforce of 140 people with an annual turnover of $30 million.

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In recent years, MCA had experienced above industry average revenue and profit growth. But this success brought fresh challenges. For instance, the company was constrained by its structure and could not secure the additional capital it needed to drive further growth. Also, MCA’s internal processes meant the company could be slow to produce the detailed and timely information potential financiers required.

How Macleay Partners helped

In 2013, MCA engaged Macleay Partners to review its business. This review had two key goals: one, to develop strategies that would improve MCA’s structure and internal processes; and two, to help MCA obtain the working capital it needed.

Starting with a comprehensive review of MCA’s operations, Macleay Partners identified a number of key challenges facing MCA. These included:

  • unresolved tax issues;
  • structural issues;
  • difficulty in accessing working capital and retaining profits.

These core issues were largely related to MCA’s corporate structure, which was appropriate for a much smaller MCA but could not accommodate a business the size of MCA.

To address these challenges, Macleay Partners designed a high-level process and worked with a number of larger professional services firms to restructure MCA. This process also involved moving MCA from a complex trust structure to a trading company.

“By restructuring MCA, we helped the company resolve its core issues. This enabled MCA to deal with its current challenges and be well placed to capitalise on opportunities in the future,” Macleay Partners Director Justin Ward said.

A successful engagement

The restructure was completed as of 31 December, 2013. Image2

This new structure allowed potential lenders to more clearly understand MCA’s operations and future prospects. As a result, MCA has secured more than $4.5 million in new working capital from its existing and new lenders, including the Export Finance and Insurance Corporate (EFIC).

“We were impressed by Macleay Partners’ ability to quickly identify and resolve our core issues, and help us secure critical funding,” MCA Joint Managing Director Andrew Pascoe said. “The process we took with Justin Ward has given us a solid basis for growth, and the confidence to focus on our business and win work.”

About Macleay Partners

Macleay Partners is a specialist business advisory practice that helps companies build robust platforms for growth. We provide debt and capital market advisory services, manage organisational change and company restructures, and undertake cash flow management.

We’d be delighted to discuss how we can help you – or your clients address business challenges. Please contact Macleay Partners Director Justin Ward at justinward@macleaypartners.com or on 0420 305 345.

Summary

Challenges for the client
  • Constrained by finances and unable to secure additional working capital.
  • Legacy structure caused significant issues for the business, including a difficulty in making financial decisions.
  • Company reporting needs were hampered by its complex financial structure.
How Macleay Partners helped
  • Designed and manage the implemented a comprehensive business restructure.
  • Negotiated with financiers to facilitate restructure and arrange credit extensions.
  • Managed external professional services providers to ensure deliverables were on time and on budget.
  • Assisted with stakeholder management during the restructure.
Results
  • Following the restructure, MCA secured more than $4.5 million in new working capital from existing and new lenders. This is a reflection of the comfort lenders have with MCA’s new structure and overall growth prospects.
  • MCA structural issues were resolved, giving the company a robust platform for future growth.
  • Directors could shift their focus from trouble-shooting to growing the business.

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