Capital stack restructuring — portfolio company

Situation

A PE-backed operating company was experiencing tightening liquidity, with cash reserves eroding faster than management's forecasts. Existing credit facilities were misaligned with the company's cash conversion cycle, covenant headroom was narrowing, and the lender group was losing confidence. The sponsor needed the situation stabilised without triggering an event of default or a forced sale process. Management was operationally capable but had no bandwidth or expertise to manage the capital side in parallel.

What we did

Mapped the complete cash flow picture — collections, payables, debt service, and working capital swings — on a 13-week rolling basis. Identified the covenant pinch points and modelled scenarios for breach, waiver, and amendment. Renegotiated key facility terms with the existing lender group, including an extension of the revolving facility maturity and a temporary covenant holiday. Introduced a new tranche of working capital finance from a specialist lender to bridge the gap. Installed a weekly cash reporting cadence with a dashboard shared across management, the sponsor, and the lender group. Rebuilt the lender communication rhythm with structured updates and forward-looking commentary.

Outcome

Liquidity was stabilised within 8 weeks of engagement. Lender confidence was restored through transparency and cadence rather than promises. The company subsequently completed a full refinancing at materially better terms — lower margin, longer tenor, and cleaner covenants. The weekly reporting cadence has been retained as a permanent operating practice.

Detail and references available under NDA for qualified counterparties.