Oilfield Services: Restructuring: Reorganization & Sale
RDT Inc., a supplier of oil/gas drilling tubular tools to operators and drilling contractors, engaged Opportune LLP to serve as Chief Restructuring Officer (“CRO”) and to evaluate and pursue strategic alternatives for the business in a highly distressed situation. Activities included cost savings initiatives, assessing and reconstituting management and positioning the company for sale.
Specifically, Opportune added value to the client by:
- Collecting millions of dollars of “stale” accounts receivable (AR) the company asserted was uncollectible
- Identified and eliminated millions of dollars of out-of-spec, damaged, unsellable and/or $0-value inventory that had accumulated over years, but had never been properly accounted for by prior ownership/management (i.e., cleaned up inventory records)
- Continued to incrementally implement cost savings and/or revenue-generating initiatives in phases while preserving the value of the core business, which included:
- Headcount reductions for redundant/idle staff;
- Elimination of CEO and CFO positions (CEO retained on a consulting basis at significantly improved economics, which were also tied to sale process incentives);
- Employee furloughs;
- Employee benefit plan changes;
- Terminated select contracts;
- Exited multiple locations contributing negative margin;
- Asset rationalization of raw materials drill pipe inventory; and
- Executed short-term lease for owned idle facility in North Dakota
- Initiatives described above significantly reduced the funding necessary to complete the sale process while simultaneously preserving going concern value.
- Led negotiations in a sale process that began out of court, but concluded in court by closing a transaction that began with a $12 million stalking horse bid with Vallourec Drilling Products USA Inc. and through auction resulted in a $22.5 million sale to Spain-based Tubos Reunidos. In addition to a significant improvement in transaction price, Opportune also led and successfully confirmed a liquidating plan for the benefit of unsecured creditors, which included, among other assets, contribution of a North Dakota facility available to unsecured creditors due to lien complications arising prior to Opportune’s involvement
- Secured debt amounted to approximately $35 million and unsecured debt approximately $75 million
In summary, Opportune was able to maximize recoveries to all creditors and minimize the funding necessary to do so.
Since inception, Opportune has been one of the most active financial advisory firms in the energy sector. Our restructuring experience, coupled with our energy-industry expertise, maximizes value for constituents in a distressed situation. We think strategically, and deliver results both operationally and financially through hands-on, actionable implementation to meet the challenges of business turnarounds. We serve equity, secured lenders, unsecured creditors and others throughout the capital structure to enhance value and increase recoveries during times of operational and financial crisis. For more information, click here.